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Shariah Finance

Saudis Spending to Drive Loans from Five-Year Low

Saudi Arabia is driving the demand for Islamic loans.



The Saudi Gazette
February 6, 2011
Jeddah, Saudi Arabia

Saudi Arabia will lead a rebound in Islamic loans from a five-year low in 2011 as accelerating economic growth and development spending boost financing needs, Banque Saudi Fransi and Standard Chartered said.

Demand for Islamic loans and Sukuk will climb this year, with borrowers tapping the financial markets to fund expansion, said John Sfakianakis, chief economist at Banque Saudi Fransi.

A new report on companiesandmarkets.com said Saudi Arabia’s nominal GDP in 2011 is predicted to be $474.6 billion, with growth of 2.5 percent expected in 2011.

Average annual GDP growth of 3.2 percent is forecast between 2011 and 2015. With the population increasing from 26.5 million in 2011 to an estimated 28.6 million by 2015, GDP per capita is predicted to rise to $22,320 by the end of the forecast period.

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Insuring Against the Risks of Sharia

Shariah Insurance for Shariah-driven violence?



Money Jihad
February 1, 2011
Algiers, Algeria

Has your business been damaged or your loved one injured by a protester? Worry no more, because civil unrest within the Islamic world has led to yet another insurance invention: riot insurance.

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Gulf Sukuk sink as Egypt Turmoil Cuts Demand




Arabian Business
February 1, 2011
Cario, Egypt

Islamic bonds are tumbling, sending Arabian Gulf yields to a six-week high, as concern political unrest in Egypt will spread pushes up the cost of crude and threatens the global economic recovery.

Average yields on Sharia-compliant sukuk from the six-nation Gulf Cooperation Council jumped 28 basis points since January 27 to 5.59 percent yesterday, according to the HSBC/NASDAQ Dubai GCC US Dollar Sukuk Index. The extra yield investors demand to hold emerging-market debt over US Treasuries widened 24 basis points over the past two days to 270, the highest level since November 30, JPMorgan Chase & Co’s EMBI+ Index showed.

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Dubai to Export Islamic Finance to Europe




Gulf News
January 31, 2011
Dubai, United Arab Emirates

Dubai's financial services industry is fast emerging as a leading catalyst in the development of Islamic finance products and services to Europe, according to officials from Dubai Exports, an agency within Dubai Department of Economic Development.

"The expertise of Dubai in the area of Islamic financial services is something that we hope to capitalise through our export facilitation services" said Engineer Saeed Al Awadi, the CEO of Dubai Exports.

"We have carried out two very successful trade missions in Islamic financial services which have linked our firms with opportunities in foreign markets."

Al Awadi hopes to export Dubai's expertise in Islamic finance to various parts of the world with the help of some of the specialised home grown financial institutions and financial clusters in the UAE.

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AIG, Mitsui Expand in Malaysia

AIG expands Shariah-compliant Takaful insurance to Malaysia.



Business Times
January 28, 2011
Kuala Lumpur, Malaysia

Malaysia is attracting global companies such as American International Group Inc and Mitsui Sumitomo Insurance Co seeking to tap growth in the country’s US$4 billion Islamic insurance market.

Mitsui Sumitomo said on Jan. 28 it’s in talks to buy a stake in a local operator offering takaful, or Shariah-compliant insurance. New York-based American International formed a joint venture with Alliance Bank Malaysia Bhd in January, four months after winning a licence from the central bank.

The entrance of more insurance firms will increase the pool of funds looking for longer-maturity debt in Malaysia as the government embarks on a 10-year, US$444 billion development program. Malaysia is giving tax incentives to foreign companies setting up takaful businesses and has eased ownership rules in domestic institutions to aid growth in the industry.

“Insurers are in the best market because of its depth and liquidity,” Mohd. Farid Kamarudin, who helps manage RM1.3 billion (US$428 million) of Islamic assets at Kuala Lumpur-based AmInvestment Management Sdn Bhd, a unit of the fourth-biggest underwriter of sukuk last year, said in a Feb. 7 interview. “This is the only market where you can buy sukuk with maturities of up to 20 years or 30 years.”

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