Shariah-compliant hedge funds hit the spot

Shariah-compliant hedge funds could outperform their traditional hedge fund counterparts this year, predicts Aureliano Gentilini, global head of hedge fund research at Thomson Reuters Lipper.

Gentilini said that Shariah-compliant hedge funds stand to benefit from emerging trends in the investments industry and developments in the Gulf Cooperative Countries namely the Persian Gulf states of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

"Although the economic slowdown across the world does not portray a very optimistic picture for oil prices, we believe plans by some emirates in the Gulf Cooperation Council (GCC) region to boost budget expenditure and run a budget deficit to better manage a scenario of global market recession may act as a catalyst for insulating, to some extent, stock markets in the GCC region from market disturbances." 

Gentilini added that while Dubai and Saudi Arabia have adjusted their GDP growth estimates following the global financial crisis, both states still project a robust non-oil GDP growth this year. 

Islamic finance market continues to expand

London and Luxembourg - Allen & Overy LLP has advised Deutsche Bank AG Dubai as arranger on the establishment of a programme for Shari'a compliant securities referenced to the performance of a range of potential underlying reference assets. The issuing entity is a special purpose vehicle, Al Mi'yar Capital SA, issuing under the Luxembourg Securitisation Act 2004.

This programme is unique as investors receive a profit or loss on their investment based on the performance of a wide range of independent reference assets or indices (which can include commodities, equities, funds or baskets), whilst offering the full range of structured product pay-offs.

Commenting capital markets Partner Andrew Sulston said: "This transaction represents a significant development in the fast evolving market for Shari'a compliant products and should allow investors access to a wider range of asset classes than previously available while also bringing increased liquidity to the market."

Yusuf Battiwala, an Associate specialising in Islamic finance, commented that: "It is particularly pleasing to see this programme come to market as it meets the challenge of trying to accommodate Shari'a requirements without compromising on the robustness of the structure from an English and Luxembourg law point of view."

Over 840 Islamic banks branches to be opened by 2012

KARACHI - Domestic banks in the country are expected to open more than 840 new branches throughout the country to carry out Islamic banking. At present the number of branches offering exclusively Islamic banking is 260. But by the year 2012 the total number of the Islamic bank branches would expand to over 1200.
This upcoming expansion in the Islamic banking in Pakistan had been mentioned in the Pakistan's Islamic Banking Sector Review 2003-2007.

The Future Outlook about the Islamic banking in Pakistan points out that the phenomenal expansion in the network of this sector is based on the factors like unmet demand, geographical coverage, product development, new segments and data collected by different Islamic banks.

It further estimated that total assets of Islamic banking industry would reach over one trillion rupees by the year 2012 while the deposits are expected to reach Rs.1 trillion. This in combination with the introduction of new sectors into the fold of Islamic banking

Islamic banking industry in Asia-Pacific seen reaching $450bln or 60% of total Islamic bank assets

From Komfie Manalo, Opalesque Asia: A report by Celent, a Boston-based financial research and consulting firm, sees fast growth in the Islamic banking industry in the Asia-Pacific region, second only with the phase in the Middle East.

The report adds assets of Islamic banks in the Asia-Pacific region is now estimated to reach $450bln, representing 60% of the total Islamic bank assets across the globe.

Key points of the report The economic crunch facing Western markets has resulted in emerging countries in the Asia-Pacific region that investors find more attractive. The growing Muslim population that expands at a rate of 2 percent annually, are mostly potential clients for these Islamic banks. Muslims now number around 1.7bln or 28.4% of the global population. At least 1 billion of them are in the Asia-Pacific region making it the next big market for Islamic banks.

Global assets of Islamic banks is estimated between $700 billion and $750 billion. Notably, Islamic banks are enjoying a faster growth rate and profit margins compared with their conventional counterparts. However, since the Islamic banking sector is a relatively new concept, the industry is facing challenges, particularly in areas of technology adoption, lack of Islamic banking experts, differences in tax treatment of various Islamic banking products and integration with global financial standards.

Chance for Islamic banking

KUALA LUMPUR - THE global economic crisis has handed the Islamic finance sector a 'golden opportunity' to show it is a better alternative to capitalism, Malaysia said on Monday.

Although capitalism has been pre-eminent for centuries, 'it is becoming obvious that there is now more proof of its weaknesses,' Deputy Prime Minister Najib Razak said in a speech to an Islamic economic conference.

'We Muslims should see the current situation as a golden opportunity for us to prove the power, strength and effectiveness of the Islamic banking and finance system,' he said in an opening address.

Islamic banking, a booming US$1 trillion (S$1.49 trillion) global industry that prohibits speculation and high levels of debt, has been relatively unscathed by the credit crunch.

The rules of the sector - which incorporate principles of sharia or Islamic law - prohibit many of the risky activities that triggered the crisis that is felling economies around the world.

Philippines Food and Drinks Market - Emerging Opportunities

The Philippines has emerged as one of the rapidly growing food and drinks industries in the Asian region over the recent past. The country is characterized by various factors, such as its growing young affluent population, rising disposable income and rising consumer awareness regarding health and safety concerns. With these factors, the demand for health food and drinks is surging high, says our new research report, "Philippines Food and Drinks Market: Emerging Opportunities".

The country exports foods to several countries, including the US, Europe and some Asian countries. However, the ongoing financial turmoil is forcing the country to look at alternative destinations such as the Middle East and Africa. In line with this, it is striving hard to get a share of highly lucrative global halal food industry, explains the report. 

Deutsche Bank launches revolutionary Sharia compliant issuance platform

Deutsche Bank announced today the launch of "Al Mi'yar", a first of its kind platform aimed at facilitating the issuance of Shari'a compliant securities.

"Al Mi'yar", from the Arabic "The Standard", is a Luxembourg domiciled platform, developed by Deutsche Bank, with Luxembourg Financial Group A.G. as the Shari'a investment manager and Deutsche Banks Trust & Securities Services group providing the settlement framework.

Geert Bossuyt, Deutsche Bank's Head of Structuring for the Middle East and North Africa, said "Deutsche Bank is extremely pleased to be again at the forefront of innovation in Islamic finance, as demonstrated by our ability to adapt all types of investment products and strategies to the Shari'a compliant world. Al Mi'yar will in my opinion revolutionize the issuance of securities in an Islamic manner. The platform meets all of the latest standards issued by the Accounting and Auditing Organization of Islamic Finance Institutions (AAOIFI) and hence should be globally acceptable."

Al Mi'yar will enable Islamic investors to meet their specific investment objectives by giving them exposure to different asset classes without compromising their Islamic beliefs. By comparison to other Islamic platforms, Al-Mi'yar maximizes efficiency and protection of investors' interests, while generating liquidity and returns.

Philippines Looking at World as Potential Halal Food Industry

The Philippines has been focusing its efforts to get a significant share in the global halal food industry which is growing stupendously, says RNCOS report. 

With Muslim population of 18-20 Million, the domestic market for halal food products is largely untapped in the Philippines, according to our new research "Philippines Food and Drinks Market: Emerging Opportunities". Besides the domestic consumption, the country is aggressively eying other regions with sizable Muslim population to benefit from the rapidly growing halal food industry all across the world.

The government is continuously making its efforts to develop halal food industry for domestic as well as export purposes. In line with this, the department of Trade and Industry (DTI) has laid out marketing plans, consisting of joint partnerships between the government, business and the Muslims, each supporting the other, says an analyst at RNCOS. It is also making studies on Muslim consumption patterns.

The country is also pushing for the establishment of halal food corners in all supermarkets, groceries and food-related retail outlets in the country by 2009. It is also planning more overseas trade shows, product sales and marketing, and the promotion of Halal certification among exporters to create markets overseas.

The most important markets, the report has identified, for Philippine Halal food include the Middle East and ASEAN countries, which have the largest number of Muslim population in the world. The report has also identified various areas of halal food industry, which are important from investment point of view.

New Index Covers Shariah-Compliant Commodities Hedge Funds

The Dubai government and Shariah Capital have launched an Islamic commodities hedge fund index, calling it the first of its kind.

The Dubai Shariah Hedge Fund Index includes as constituents four funds, part of the DSAM Kauthar Commodity Fund. The four funds each received US$50 million from the Dubai Multi Commodities Centre Authority—the government agency working with Shariah Capital to create the index—and are constituents of the Al Safi Trust, the shariah-compliant hedge fund platform established last year by Barclays and Shariah Capital.

The four funds will invest in gold, energy, natural resources and mining, the DMCC and Shariah Capital said.