“We want to tap petrodollars as Middle East countries have lots of money,” Dheerasak Suwannayos, president of the state- owned Islamic Bank of Thailand, told reporters in Bangkok today.

Islamic Bank plans to sell seven-year Islamic bonds in the third quarter of 2009, Suwannayos said. State companies will use money raised from the securities, known as sukuk, to help finance their projects.

Thailand aims to join Hong Kong, the U.K., Malaysia, Indonesia and Japan in setting up an Islamic bond market to attract Persian Gulf oil wealth. The Thai government has said it plans to spend about $50 billion in the next four years on transport, roads and other infrastructure works to help spur economic growth.

Sukuk are based on assets and pay a profit rate to investors instead of interest, which is banned by Muslim Shariah law. Thailand’s sukuk will pay a profit rate of about 75 basis points below the London interbank offered rate, Suwannayos said.

A basis point is 0.01 percentage point.

The Islamic financial market may triple in size to $2.8 trillion by 2015, the Kuala Lumpur-based Islamic Financial Services Board estimates. Borrowers sold $12.4 billion of sukuk this year after raising a record $30.8 billion from the securities last year, data compiled by Bloomberg show.

Islamic Bank of Thailand is the nation’s only commercial bank that complies with Shariah.

By Suttinee Yuvejwattana (Bloomberg)

In a statement, IFIS said the report, titled Sukuk in HI 2008: Key Trends and Highlights, indicated that issuance had fallen by 54% in the first half of 2008 (1H08) compared to 1H 2007. It said this was the first such drop since 2001, when the sukuk market started to take off.

In 1H08, the total number of sukuk issued was 61, compared with 111 in 1H07 and 77 in 1H06. In terms of value, 1H08 tallied US$11.55 billion (RM40.08 billion) compared with US$25 billion in 1H07 and US$13.67 billion in 1H06.

IFIS, owned by global publishing giant Euromomey Institutional Investor, said the impact of the credit crunch on Islamic markets had been severe, contrary to its own expectations at the end of 2007.

It said the 54% year-on-year drop in the value of issuance in 1H08 put to rest theories suggesting that Islamic finance was immune from the global credit environment.

“According to the report, the drop in issuance confirmed that Islamic finance has become intertwined with global financial markets, and is in no way an isolated market,” IFIS said.

It said although Southeast Asia (SEA) issued more sukuk than the Gulf Cooperation Council (GCC) countries, the report also noted that for the first time, the GCC surpassed SEA in terms of total value of sukuk issued. IFIS had predicted this in its 2007 annual report.

IFIS said reflecting this development, the Malaysian ringgit and the US dollar had had trouble maintaining their place as the top currencies for sukuk issuance. It said the ringgit held only 33% of the total value of issuance, with the dollar sliding to third place behind the Emirati dirham.

“Also noteworthy has been the drop in the number of sukuk offerings worth more than US$1 billion. The first half of 2008 saw only two such issuances, compared to 14 in all of 2007.

“However, there has been no expansion in small and mid-sized issuances in the GCC, with all corporate sukuk, bar one, being worth more than US$100 million. By contrast, Malaysia continues to have a large number of corporate issuances within the US$1 million to US$10 million range and the US$10 million to US$100 million range,” it said.

IFIS said surprisingly, Calyon was the top bookrunner for 1H08, followed by CIMB Islamic and HSBC Amanah, respectively. The top 10 global bookrunners’ list continues to be dominated by international banks, with a good showing for CIMB Islamic and Dubai Islamic Bank.

Article re-posted from The Edge Daily

The report, ‘Sukuk Market Continues To Grow Despite Gloomy Global Market Conditions’, said the appetite from issuers in a large number of countries — Muslim and Non-Muslim — was growing.

In a statement here today, S&P said entities located in more than 15 countries, predominately non-Muslim, had expressed interest or announced their intention to issue sukuks.

S&P credit analyst, Mohamed Damak, said more than 50 percent of sukuk issued in the first half of 2008 were “ijara” (lease financing), most probably as a direct consequence of the debate among some syariah scholars regarding the syariah-compliance of most sukuks previously issued.

He said to date, S&P’s has rated about 30 sukuks (or sukuk programmes), the bulk of which were “ijara” or “musharaka” (venture capital financing).

Mohamed said the US dollar has lost its position as the currency of choice for sukuk issuance this year not only because of its weakness but also due to speculation about the depegging of some Gulf Cooperation Council (GCC) currencies from the dollar.

“Corporates remained the main issuers, with financial institutions and sovereigns far behind,” he said.

According the report, total issuance stood at about US$14 billion in the eight months to Aug 31, 2008, down from about US$23 billion during the same period in 2007.

“The lower level of issuance was largely due to the deteriorated conditions on the global markets resulting in lower investor interest in buying the paper and the related widening of credit spreads,” it said.

It said most sukuks were issued in markets where liquidity was still abundant and/or appetite for syariah-compliant instruments was high, namely the countries of the GCC and Malaysia.

– BERNAMA

The oil windfall already has the new generation of Gulf leaders coming up with more investments and economic development plans to channel the excess liquidity.

“When it comes to infrastructure alone, there’s US$600 billion worth of project financing to be done in GCC for the next few years,” said Dubai International Financial Centre (DIFC) executive director of Islamic Finance, Nik Norishky Thani.

DIFC is one of the fastest-growing financial centres. A full-fledged onshore capital market, it offers participants 100% foreign ownership and zero tax on income and profits as part of its many financial incentives.

Speaking to The Edge Financial Daily, Nik Norishky said Islamic finance’s year-on-year average growth of 15%-20% had powerhouses such as HSBC Bank, Citigroup, Barclays, JPMorgan and Standard Chartered Bank setting up headquarters in DIFC.

He said global Islamic finance (IF) was expected to grow to US$1.4 trillion in 2010 from US$800 billion currently.

“We need to come up with more investment products, so that the petrol money can go somewhere. It’s a question of demand meeting supply and right now there’s a lot of demand. Where this liquidity goes to is not quite there yet,” he said.

“When it comes to IF, there’s not enough fixed income instruments out there for IF to grab on to. You find that whenever sukuks are issued, they are pretty much taken up,” said Nik Norishky.

“It’s oversubscribed multiple times. So the money has to go somewhere. It goes to Commodity Mudarabah as the last form of alternative in the money market,” he added.

A Malaysian, Nik Norishky urged the country to be a more pro-active global player in IF.

“In any IF conference, Malaysia would always be mentioned as the leader in this industry with cutting-edge approach,” he said.

“Hence when other competing financial centres start to develop IF, they look to Malaysia for the skills. So our talents, especially in Islamic finance, are being exported and doing very well abroad,” said Nik Norishky.

He said he learnt that there were an estimated 1,300 to 1,600 Malaysian bankers working in the GCC.

To reverse the brain drain, he said Malaysian FI needed to venture abroad and the Malaysia Islamic Financial Centre (MIFC) was the perfect platform for competing in the international market.

Malaysian Islamic FI needed to “export” their expertise and products to progress, said Nik Norishky.

“Use your MIFC springboard to export your product and it can be hosted easily in DIFC,” he said.

“Out of the 300 financial institutions in DIFC, 10% are actively involved in IF. The products that they come up with are pretty much the same products we’ve been coming up with for donkey years but they are out there while we are still pedalling our goods here,” he said.

“Look at what KFH (Kuwait Finance House Bhd), Al Rajhi Bank and AFB (Asian Finance Bank) did and how successful their brands are in Malaysia. Al Rajhi, for example, never ventured beyond the Saudi shores,” said Nik Norishky.

However, a strong presence and branding was needed when Malaysia decided to venture into GCC, he stressed.

“Don’t go in with just a three-man team because you would be competing with the likes of Barclays, HSBC, JPMorgan and UBS. These big players have set up headquarters for IF activities there and they have their best guys. You would be a non-starter,” said Nik Norishky.

“If a Malaysian Islamic FI expands business abroad but takes this approach more as an afterthought rather than a serious expansion, they would not be able to compete with them,” he added.

“We need to think outside the box and go out there with our expertise. You do that, and you’ll start to see Malaysians abroad coming back for the action.

“Remember back in the late 90s, when we kept talking about globalisation? Globalisation is on us now but somehow we have not really gotten up for it. We needto evolve.”

by Lu Jing Shia

Email us your feedback at fd@bizedge.com

Sales of Shariah-compliant debt, which financed Dubai’s Palm development, the world’s largest man-made island and where David Beckham and Donald Trump have homes, fell 50 percent in 2008 and prices dropped an average 1.51 percent, according to HSBC Holdings Plc index data.

The so-called sukuk market, which has doubled each year since 2004 and grown to $90 billion, is declining after a Bahrain-based group of Islamic scholars decreed in February that most bonds ran afoul of religious rules. Only one that complies with the edict has been issued, pushing up borrowing costs on projects including $200 billion of real-estate developments in the United Arab Emirates capital.

“In times of distress, the first thing investors sell are the credits they don’t fully understand,” said James Milligan, Dubai-based head of Middle East fixed-income trading at HSBC, the biggest underwriter of sukuk bonds in the Gulf last year. “This has hit spreads hard in the region,” he said, referring to the relative level of the Islamic bonds’ yields.

The bonds satisfy Islam’s ban on interest by allowing investors to profit from the exchange of assets, rather than money. Sales of the debt fell to $11 billion from January to August, from $21 billion in the same period of 2007, according to data compiled by Bloomberg. They peaked at $38.6 billion last year, growing from virtually nothing six years earlier, the International Monetary Fund said. The decline in prices is worse than the 1.25 percent drop in U.S. corporate bonds, HSBC data show.

No Guns

Banks sell sukuk by using assets to generate income equivalent to interest they would pay on conventional debt. The money can’t be used to finance gambling, guns or alcohol.

The Accounting & Auditing Organization for Islamic Financial Institutions ruled in February that bonds don’t meet religious requirements if they haven’t transferred ownership of collateral to holders. About 85 percent of sukuk failed this test, the board said.

Under the new rules, a sukuk issuer passes ownership of an underlying asset, such as a building, to the investor for the bond’s duration. Should the price of the asset rise or fall, the change will be reflected in the bond’s value. Buyers can’t be guaranteed the security’s full face value on maturity. Before the new rules, investors weren’t the legal owners of the underlying assets and were effectively lenders to the issuer.

Waning Demand

As demand for Islamic-compliant bonds waned, yields rose to 2.94 percentage points more than the London interbank offered rate, or Libor, near a record and compared with 2.43 percentage points for an equivalent non-Islamic bond, Bloomberg data show. The spread was 1.08 percentage point a year ago and about double that in February.

“I wouldn’t add anything to” our ruling, said Sheikh Muhammad Taqi Usmani, chairman of the accounting board and a retired justice of the Pakistan Supreme Court. “We’re just pronouncing what’s compliant to Shariah and what’s not,” said Usmani, who advises HSBC, Dow Jones & Co. Inc., the Central Bank of Bahrain and the Islamic Corporation for the Development of the Private Sector.

The ruling was intended to introduce “unified rules” to the market, said Mohamad Alchaar, secretary general of the board, whose rulings are binding in six Arab countries.

Sorouh Real Estate Co., Abu Dhabi’s third-biggest property company, sold 4 billion U.A.E. dirham ($1.1 billion) of bonds on Aug. 13, the first sukuk that’s “fully compliant” with the Shariah Board’s ruling, according to Robin Ward, a director of structured finance at arranger Citigroup Inc.

Shariah Scholars

Citigroup’s panel of Shariah scholars in London is led by Sheikh Nizam Yaquby, former chairman of the Bahrain-based accounting board. Yaquby, who advises about 40 financial institutions on Islamic financing rules, declined to comment when contacted by Bloomberg News.

“This is a true Islamic sale,” said Ward. “You need a tangible asset, and in this case, we had a freehold of land. There’s no recourse back to the originator, which is the way previous sukuk have been done.”

The clincher for getting the board’s approval, said Ward, was transferring ownership of the underlying asset when the bonds were sold. The bulk of the debt paid interest of 200 basis points more than the one-month Emirates interbank offered rate, according to Citigroup.

“In essence, the previous sukuk structure was replicating a western bond where you get your money back and that’s it,” said Majid Dawood, chief executive officer of Yasaar Ltd., a Dubai- based consultancy that advises Paris-based Societe Generale SA, Royal Bank of Scotland Group Plc in Edinburgh and Dublin-based Bank of Ireland Plc.

10 Percent Drop

More than half a trillion dollars in worldwide credit writedowns and losses squeezed lending in the Mideast as the Dubai Financial Market Real Estate Index of property-related stocks dropped 19 percent since January. Morgan Stanley analysts predict a 10 percent decline in property prices by 2010. About 34 percent of Gulf-region sukuk since 2006 were issued by real- estate companies, according to Barclays Capital.

“The sukuk market has been very tough this year,” said Kuala Lumpur-based Nor Hanifah Hashim, who manages about $1 billion in an Islamic fund at CIMB, the world’s largest underwriter of the debt. “People are adjusting to the new rules and you need to have very good quality of assets to attract investors.”

Most issuers are still able to sell non-Islamic debt. Mideast companies raised $50 billion this year in loans, compared with $73 billion during the same period of 2007, Bloomberg data show.

`Layer of Uncertainty’

“If you look at the big capital raisings, most have been done through the bank market,” said Philipp Lotter, a senior credit officer at Moody’s Investors Service in Dubai. The Islamic board ruling “added an additional layer of uncertainty. Certain investors will not invest in sukuk,” he said.

Investment Corp. of Dubai, a state-owned holding company, said last week it was raising $5.6 billion in a dual-currency loan, while Abu Dhabi National Energy Co., the state-controlled energy company known as Taqa, borrowed $3.15 billion for three years last month to refinance debt.

“Investors are trying to get used to the new structure and studying new requirements,” said Gaurav Agarwal, chief financial officer of Tamweel PJSC, the United Arab Emirates’ biggest mortgage provider, which plans $500 million in asset-backed loans by year-end. “Borrowers are raising money through bilateral loans until the sukuk market becomes hot again.”

Tamweel’s last pre-ruling sukuk was one-third backed by completed property and two-thirds backed by projects under construction. Those proportions would have to be reversed now, said Agarwal.

“The sukuk market is clouded by considerable uncertainty and nervousness,” said Chavan Bhogaita, head of credit research at HSBC’s Middle-East unit. “Spreads have been widening, sukuk have been underperforming conventional bonds and investors have been shying away.” By Haris Anwar

To contact the reporter on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.net

Last Updated: September 3, 2008 08:40 EDT

Sukuk issuances here whether in Ringgit or in U.S. dollars are expected to remain attractive as Malaysia has a strong domestic investors base to anchor the distribution of major sukuk issues, said its chairman Datuk Zarinah Anwar.

“Sukuk pricing for Malaysia-originated issues are highly competitive and there is also strong availability of expertise as well as an established regulatory framework which meets both Syariah and legal requirement,” she said.

Malaysia pioneered the development of the global sukuk market with the launch of the first sovereign five-year global sukuk in 2002.

Since then, the country’s sukuk market had experienced unprecedented growth with Malaysia firmly established as one of the largest issuers of sukuk over the years, she said in her keynote address at the Malaysian Islamic Finance Issuers and Investors Forum 2008.

Last year, 76 percent of bonds approved by SC were sukuk. — BERNAMA

Hot on the heels of the recent launch by Daiwa Asset Management Company, the second largest asset manager in Japan after Nomura Asset Management, with funds under management of $96.34 billion, of the Daiwa FTSE Shariah Japan 100 ETF, comes the launch at end June of the Islamic Fund of Hedge Funds by Barclays Capital and Shariah Capital Inc. of the US off the Al-Safi Trust alternative investment platform.

Such is the latent appetite for value-added alternative Islamic financial products, that the Dubai Multi Commodities Center Authority (DMCC), an agency of the Dubai government, saw fit to seed the Islamic Fund of Hedge Funds investing a total of $250 million – $50 million in five hedge funds through the Al-Safi Trust alternative investment platform, established jointly also by Barclays Capital and Shariah Capital Inc. in Cayman Islands.

The first five funds on the Al-Safi platform are long-short equity funds focusing on energy, resources and soft commodities and managed by US-based hedge fund managers – Tocqueville Asset Management (gold); Lucas Capital Management LP (energy); Zwelg-Dimenna International Managers Inc. (resources); Ospraie Management LLC (agriculture); BlackRock Inc. (resources & mining) respectively. But the promoters are confident that the platform would attract a whole range of alternative investment products hitherto absent from the Islamic capital and fixed-income product market, in addition to additional long/short equity hedge funds; 130/130 funds as well as specialized investment funds.

Indeed there is a brave new world in Islamic alternative product structuring opening up. Take, for instance, Merrill Lynch International, whose involvement in Islamic product structuring goes back to the 1980s. The main product features of Merrill Lynch’s current Islamic platform includes derivative solutions for options (both vanilla and exotics) and swaps; securitization and CDOs; sukuk; and tradable asset-backed Islamic investment certificates. And the good news according to Emmanuel Crenne, managing director, emerging markets structuring at Merrill Lynch International, who has had a long experience structuring Shariah-compliant products, the days of simply repackaging (or Islamizing) conventional products are effectively over. The new products coming on stream are truly Shariah-based.

Merrill Lynch, for instance, last year launched its own investment platform – Falak Islamic Products Limited – a Cayman Islands vehicle which issues investment certificates against a range of Islamic asset-backed instruments such as energy projects, commodities, equities etc. The size of the platform is a staggering $25 billion aimed primarily at HNWIs.

One of the pioneering investments under this program is the Islamic right way credit protection transaction closed in August 2007 to buy credit protection on counterparty risk generated by a physical power swap it had entered to with a UK power producer. This stresses Crenne, is the first ever non-synthetic Islamic credit default protection transaction, and the $50 million deal was very complex and innovative and was executed with one of the most conservative Islamic financial institutions in the Gulf Cooperation Council (GCC) with a very strict Shariah board.

Strict Shariah compliance is also a strong feature of the latest Islamic Fund of Hedge Funds, according to Eric Meyer, CEO of Shariah Capital Inc., who has been working on this product for the last six years. Shariah Capital Inc., which is now listed on the London Stock Exchange’s Alternative Investment Market (AIM), is the Shariah adviser to the fund and also a joint venture partner with Dubai Commodity Asset Management (DCAM) in Dubai Shariah Asset Management, which is the marketing and distribution manager of the fund. DCAM is a wholly-owned entity of DMCC. Similarly, Barclays Capital is also the prime broker for the fund.

The Al-Safi platform approach seems to offer a neat turnkey solution to Shariah-compliant hedge fund strategies through which hedge fund managers can meet the Shariah criteria. Shariah Capital Inc. is effectively doing the stock screening on a monthly basis to ensure Shariah compliance, thus allowing the hedge fund managers access to a Shariah-compliant universe. There have been other attempts at launching Islamic hedge funds in the past. In 2006, Fimat, the prime brokerage arm of French bank, Societe Generale, launched what it claimed to be the first such fund based on commodities; and Al-Fanar, owned by Worms & Co. and Saudi Economic Development Company (SEDCO), launched the Al-Fanar US Hedge Fund managed by Permal Asset Management.

The major issue in a hedge fund is short selling, which is proscribed in Islamic investment. Barclays Capital and Shariah Capital Inc. have come up with a Shariah-compliant equivalent which replicates shorting using the contract of Arbun. Under this arrangement, the trader who wishes to short a stock in the Al-Safi platform can put a sell order through Barclays Capital’s prime brokerage, which would record the transaction as a purchase and not a loan. This process establishes ownership of the asset before sale to the market. In Islamic finance you cannot sell an asset which you do not own. As such, an investor cannot borrow shares from a brokerage house or a bank and sell them in the market for an eventual gain. Al-Safi also tracks each trade and each position of ach hedge fund manager through separately-managed accounts to ensure strict Shariah compliance.          

The Fimat and Al-Fanar funds however used the Salam contract, effectively using a forward sale concept for equities. But while the mechanics of both structures are different to conventional shorting, the economic effect is similar to the conventional short sell.

Whether the Islamic finance market, inherently still conservative, is ready for such pioneering innovations such as hedge funds or derivatives only time will tell. But then, it is financial engineering and innovation that drives both regulation and market sophistication. And the Islamic finance sector in this respect is no exception.

Earlier this month, the British government announced it favoured stepping into Islamic finance, and wanted to raise some $4 million through Shari’ah compliant bonds. I was not surprised by this development as London is already home to the largest Islamic finance market in the western world, and I was quite confident the government would want to maintain its leadership status in the industry.

But what excites me the most is that my home country, Singapore, has finally decided to embrace Islamic finance. The Singapore government rarely makes the wrong decisions and I am sure they did their homework before plunging into Islamic finance. And although it is relatively a late entrant into Islamic finance, I am confident that Singapore will be making waves in the Islamic finance industry in the near future.

The Daiwa FTSE Shari’ah Japan 100 exchanged traded fund (ETF) finally made its debut on the Singapore stock exchange and has the distinct honour of being the country’s first Shari’ah compliant ETF to be listed on a local bourse. It offers an investment channel into Japanese companies that fully complies with Shari’ah investment principles.

The country has also been refining its regulatory framework and tax structures over the years to facilitate the growth of the Islamic finance industry. Some of these incentives include a 5 per cent concessionary tax rate for income derived from Shari’ah compliant fund management, lending, insurance and reinsurance.

The Monetary Authority of Singapore also has plans to develop a facility for the issuance of Singapore dollar denominated sovereign rated Sukuk in response to the needs of financial institutions conducting Shari’ah compliant activities in Singapore.

Although tiny in size, Singapore’s status as one of the economic hubs in Asia puts all of its actions under the microscope. And I believe Singapore’s endorsement of Islamic finance will further spur the development of the industry in Asia.

(Source: CPI Financial)

The Islamic Sukuk Liquidity Instrument (ISLI) has been jointly developed by the CBB and the Bahrain-based Liquidity Management Centre (LMC), an organization which provides asset sourcing, structuring and market making capabilities.

ISLI has been designed to enable financial institutions, both conventional and Islamic, to access short term liquidity against Government of Bahrain Islamic leasing (Ijara) bonds (sukuk), issued by the CBB.

The new initiative reflects CBB’s continuing commitment and contribution to the Islamic finance industry and will further enhance Bahrain’s role as a world leader in the sukuk market.

‘The development of the uniquely-structured ISLI represents a major breakthrough for the Islamic finance industry worldwide and will significantly enhance the sukuk market,’ said Dr Abdul Rahman Saif, Executive Director, Banking Operations, at the CBB.

The availability of instruments such as ISLI will help create a deeper and more liquid sukuk market, which requires a variety of short and long term instruments to enhance Islamic banks’ ability to efficiently manage their liquidity. It will also stimulate and promote a more active Islamic financial market.

The tripartite structure developed by the CBB and LMC will enable financial institutions holding BD-denominated CBB Ijara sukuk (short, medium or long term) to engage in transactions aimed at accessing short term liquidity.

‘Conventional money markets have a wide range of instruments which allow banks to invest surplus funds or borrow funds in the short term. ISLI will provide similar flexibility to Islamic financial institutions as well as conventional institutions subscribing to CBB sukuk,’ said Dr Saif.

The new instrument will complement the already existing and hugely popular sukuk offered by the CBB.

In 2001, the CBB became the first sovereign in the world to develop and issue sukuk. Since then, the CBB has an established calendar of Islamic debt paper, which comprises short term as well as medium to long term sukuk.

A BD5 million issue of Sukuk Al-Ijara, of 6-month tenor, and a BD6 million issue of Sukuk Al-Salam, of three-month tenor, are each offered once a month.

For the medium and long term tenors, the CBB has offered a total of 14 issues of Ijara sukuk, with a total value of $2.05bn, of which $1.27bn is currently outstanding.

The most recent one, a five-year $350m international issue now listed on the London Stock Exchange, was made in March 2008.

‘We expect to bring the ISLI to market later this month,’ said Dr Saif.

The contract has been endorsed by the Shari’a Boards of the CBB and LMC. Members of the CBB Shari’a Board are Shaikh Nizam Yaquby, Shaikh Dr Abdul Sattar Abu Ghuddah, Shaikh Mohsin Al Asfoor, Shaikh Abdulla Al Manea and Justice Taqi Usmani, while LMC’s Shari’a Board comprises Shaikh Dr Hussain Hamid, Shaikh Dr Ajeel Al Nashmi, Shaikh Adnan Al Qattan and Dr Abu Ghuddah.

‘In the quest for developing the Islamic financial market, we have reviewed this instrument and found it to add significant value to the sukuk market,’ said a CBB Shari’a Board statement.

Mr. Ahmed Abbas, Chief Executive Officer of LMC, thanked the CBB for its support in structuring ISLI, which was a groundbreaking development for the Islamic finance industry.

‘The CBB has committed considerable resources, including its real time national payment system (RTGS) and Securities Settlement System (SSS) to make ISLI an operationally efficient product,’ said Mr. Abbas.

Bahrain: Monday, June 09 – 2008 at 15:54

http://www.ameinfo.com/159772.html

The DJIM China Offshore Hong Kong Index represents the performance of companies that have been screened for compliance with Islamic principles and whose primary operations are in China but trade on the Hong Kong stock exchange.

Stocks included in the index are H-Shares and Red Chips.

The DJIM China Offshore Hong Kong Index is designed to serve as underlying for investment products such as mutual funds, exchange-traded funds (ETFs) and other investable products.

“The Dow Jones Islamic Market China Offshore Hong Kong Index is another innovative addition to the highly successful Dow Jones Islamic Market index series following a unique and superior methodology,” said Dow Jones Indexes editor and executive director John Prestbo.

“Market participants will find in this index a way to track Sharia-compliant mainland China stocks that are listed in the easily accessible Hong Kong market rather than in the restricted local Chinese market.”

The DJIM China Offshore Hong Kong Index is weighted by free-float market capitalisation and component weights are capped at 10 per cent.

As of April 30, the index consists of 40 components of which the top five components by free float-adjusted market capitalisation are China Mobile, China Unicom, CITIC Pacific, CNOOC and PetroChina.

The DJIM China Offshore Hong Kong Price Index (US dollar) gained 152.9pc from its base date, December 31, 2005 in a backtest. The DJIM China Offshore Hong Kong Index is calculated in both US dollar and Hong Kong dollar versions. It is reviewed quarterly in March, June, September and December.

Launched in 1999, the Dow Jones Islamic Market Indexes seek to measure the global universe of investable equities that pass screens for Sharia compliance.

The Dow Jones Islamic Market Indexes combine Islamic investment principles with Dow Jones Indexes’ objective, transparent and rules-based methodology.

In 2006 the index family expanded to include the Dow Jones Islamic Market Sustainability Index, which combines Islamic investing principles with sustainability criteria, the Dow Jones Citigroup Sukuk Index, the first index to track Islamic bonds and Dow Jones Islamic Market BRIC Equal Weighted Index, which tracks Sharia compliant stocks in Brazil, Russia, India and China. Islamic blue-chip indexes for Sri Lanka, Dubai, China/Hong Kong and India were launched last year.

There are currently more than 75 licencees with more than $7 billion in assets benchmarked to the Dow Jones Islamic Market Indexes.

Reference: Gulf Daily News