Imran’s Kifli.net Living the Life

Singapore: Sukuk gaining acceptance

Proponents of Islamic finance should pat themselves on the back and rejoice. Not only has the industry been largely sheltered from the US credit crisis, major economies are also beginning to warm up to this relatively new form of financing.

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.

Central Bank of Bahrain set to launch key Islamic financial instrument

The Central Bank of Bahrain (CBB) is set to launch a key Islamic financial instrument aimed at providing a much-needed liquidity management tool to Islamic financial institutions.

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.

Dow Jones launches Islamic market index

NEW YORK: Dow Jones Indexes, a leading global index provider, has launched the Dow Jones Islamic Market (DJIM) China Offshore Hong Kong Index.

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.

Global Sharia Asset to Reach US$2 Trillion by 2010

Bisnis Indonesia Daily News – 05-JUN-08

JEDDAH: The Islamic Development Bank predicts global sharia financial asset grows by 20% per annum to US$2 trillion by 2010 from the current US$900 billion, thanks to oil price fluctuation and sub-prime mortgage crisis.

Executive Governor of the IDB for Malaysia Dato Ahmad Husni Mohammad Hanadzlah argued the sub-prime crisis and oil price fluctuation had made investors shift from established financial instruments to safer and more transparent sharia-based ones.

“Investors forecast sharia financial assets will grow by 20% per annum,” said Ahmad, who is also the Malaysian First Deputy Minister of Finance at the 33rd Annual Meeting of the IDB’s Board of Governors in Jeddah yesterday.

Therefore, he continued, the IDB should reposition itself and capture an opportunity to expand sharia financiang and capital market.

More Regulatory Action Needed To Boost Islamic Banking In East Asia

KUALA LUMPUR, June 3 (Bernama) — Islamic banking in East Asia is slowly developing, but needs more action by regulators to establish legal and regulatory frameworks in order to emerge as a significant segment across the region, according to an analyst.

Aside from Malaysia, where the industry’s assets now account for 15.4 percent or about US$62 billion of the country’s banking system assets, its market penetration across the region has been somewhat patchy, said Christine Kuo, vice president and senior analyst of Moody’s Investors Service.

For instance, she said, while Islamic banking has achieved relatively high market penetration in Brunei and asset growth in Indonesia has been rapid (though off a low base), Islamic banking services available in the Philippines, Singapore and Thailand remained very small in terms of asset size.

Gulf Islamic bond sellers shun dollar

Two Gulf borrowers are planning to sell ringgit Islamic bonds in Malaysia, in the latest move that highlights the rising cost of borrowing in US dollars, the previous Islamic bond denomination of choice.

A global credit crunch has made dollar borrowing more expensive, and bets that Gulf states could allow their dollar-pegged currencies to appreciate to dampen inflation has seen dollar assets fall from favour.

National Bank of Abu Dhabi (NBAD) plans to sell up to $925.6 million in ringgit-denominated bonds, which could include an Islamic tranche, the lender said.