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Alternative Latin Investor: Wealth Management Issue 18

The Alternative Latin Investor Issue #18 is focusing on Wealth Management in Latin America.

Special Issue: Wealth Management

The World’s First Diamond Fund
Lack of Transparency in Colombia: Root Causes
LatAm Wealth Management Overview
Private Aviation Takes Off in Latin America
High-Tech Financial Technology Hits LatAm

…and much more. Regulations,  Tax & Money Laundering, Structured Finance, Political Risks,  Agri Business, Impact Investment, Wine Investment, Infrastructure, Art

Please view and access Issue 18  in the following formats

Virtual Viewer http://www.alternativelatininvestor.com/Issue18-Preview.htm

For more details and information please view http://www.alternativelatininvestor.com

Source: AlternativeLatinInvestor 18.10.2012

Filed under: Argentina, Banking, BM&FBOVESPA, Brazil, Chile, Colombia, Energy & Environment, Islamic Finance, Mexico, News, Services, Trading Technology, Wealth Management, , , , , , , , , , , , , , , , , ,

Bursa Malaysia and KRX: Support of the Malaysia International Islamic Financial Centre’s Initiative aims to boost Growth of Islamic Finance Market- Event 19.11.2009

The Korea Exchange (KRX) and Bursa Malaysia will be playing host to the Korean investment bankers, advisers, issuers and institutional investors at its inaugural KRX-Bursa Malaysia Islamic Capital Market Conference, which will be held on 19 November 2009 in Seoul, Korea. This conference which is co-organised in support of the Malaysia International Islamic Financial Centre (MIFC) initiative, aims to share Malaysia’s Islamic finance experience and to promote the opportunities in the Malaysian Islamic capital market landscape. This collaborative effort hopes to strengthen the growth opportunities of Islamic finance amongst the discerning Korean investors and issuers.

This conference is timely as there is a strong interest for Korea to grow the Islamic finance industry, following from the proposed liberalisation measures by the Korean government which are aimed to allow the issuance of Islamic bonds or sukuk as well as allow incomes from sukuk to be tax-exempted. These proposed laws are expected to be passed by the Korean government’s National Assembly later this year.

In conjunction with the KRX-Bursa Malaysia Islamic Capital Market Conference, delegates of the MIFC initiative, which comprises senior management of Bank Negara Malaysia (Central Bank of Malaysia), Securities Commission Malaysia and Bursa Malaysia, will be participating in the conference. Malaysia acknowledges Korea as a potential Islamic financial market and welcomes Korea’s participation in shaping the Islamic finance landscape together, via leveraging on Malaysia’s more than 30 years of experience in developing the world’s most comprehensive Islamic financial system.

Chief Executive Officer of Bursa Malaysia Berhad, Dato’ Yusli Mohamed Yusoff said, “We hope this conference will stimulate interest in the Shari’ah compliant products which are currently in demand from investors who are seeking returns from alternative and ethical investments. In addition, this visit by the delegates from the MIFC will pave the way for more opportunities to exchange ideas in Islamic finance and forge greater working relations between Korea and Malaysia for the interest of growing this important industry. We are confident that the Malaysian and Korean authorities as well as KRX and Bursa Malaysia would be able to leverage on our respective strengths in the establishment of an Islamic capital market in Korea.”

This KRX-Bursa Malaysia Islamic Capital Market Conference is expected to attract 200 participants and will provide a platform for all attendees to gain an insight into the outlook and trends of Islamic capital markets. Key discussion topics will centre around the liberalisation of Islamic financial markets, investment and business opportunities in Islamic capital market, the Islamic finance landscape and framework as well as the growth of Islamic finance products in Asia and globally.

Source: MondoVisione, 16.11.2009

Filed under: Asia, Events, Exchanges, Islamic Finance, Korea, Malaysia, News, Services, , , , , , , , , , ,

Malaysian Shari’ah-compliant commodity trading platform goes live

Malaysia’s position as a leading Islamic financial hub was further solidified today with the successful commencement of trade on the world’s first, end-to-end Shari’ah-compliant commodity trading platform.

This fully-electronic platform, called Bursa Suq Al-Sila’, is an international commodity platform that is able to facilitate commodity-based Islamic financing and investment transactions under the Shari’ah principles of Murabahah, Tawarruq and Musawwamah. The launch commodity is Malaysia’s star product, crude palm oil (CPO).

Formerly known as Commodity Murabahah House, Bursa Suq Al-Sila’, which means commodities market in Arabic, is an initiative spearheaded by the Malaysia International Islamic Finance Center (MIFC). The trading platform is operated by Bursa Malaysia via its fully Shari’ah-compliant wholly-owned subsidiary, Bursa Malaysia Islamic Services Sdn. Bhd.

YB Dato’ Seri Ahmad Husni Hanadzlah, the Malaysian Finance Minister II, was on hand to unveil the Bursa Suq Al-Sila’ brand and witness its inaugural trading day. Also present at the ceremony were YB Dato’ Hamzah Zainudin, Deputy Minister of Plantation Industries and Commodities, YBhg. Tan Sri Dato’ Sri Dr. Zeti Akhtar Aziz, Governor of Bank Negara Malaysia, YBhg Datuk Ranjit Ajit Singh, Managing Director of the Securities Commission as well as senior officials of Bank Negara, the Securities Commission and Bursa Malaysia.

Dato’ Yusli Mohamed Yusoff, Chief Executive Officer of Bursa Malaysia, said, “It was indeed a good start for Bursa Suq Al-Sila’. This innovative platform would not have become a reality if not for the support and participation of industry players across the board.”

Dato’ Yusli added, “Bursa Suq Al-Sila’ is indeed one-of-its-kind as it is the world’s first Shari’ah-compliant commodity trading platform specifically designed to facilitate Islamic finance. It is expected to also enhance liquidity management for Islamic Financial Institutions. Commodity suppliers such as Crude Palm Oil suppliers are also provided with an additional revenue source.”

According to Dato’ Yusli, Bursa Suq Al-Sila’ complements the money and capital markets as a whole. This trading platform is poised to strengthen Bursa Malaysia’s edge in the global Islamic market place.

The trading in Bursa Suq Al-Sila’ today follows the recent signing of Memorandum of Participation between Bursa Malaysia and over 26 commodity suppliers, financial institutions and trading participants three weeks ago.

The essence of Bursa Suq Al-Sila’, which embraces the commodity Murabahah concept, involves one party buying commodity at a certain cost and selling it to a customer at a cost-plus-profit basis. The customer will then pay the amount and the profit to the party on a deferred-payment basis. The customer then sells back the commodity to the commodity market on spot for cash. The trade involves the sale and purchase of real physical assets.

In the initial stage, crude palm oil will be used as the launch commodity. Eventually, this will expand to other Shari’ah approved commodities covering both soft and hard commodities. Similarly, initial trades in Bursa Suq Al-Sila’ will be conducted in Ringgit Malaysia-denominated. As Bursa Suq Al-Sila’ is multi-currency capable, non-RM trades will be introduced in the foreseeable future to provide for international market players. This in turn will provide more choices, access and flexibility for international financial institutions to participate in this market.

Dato’ Yusli concluded, “With Bursa Suq Al-Sila’, we are now diversifying our offerings and extending our traditional businesses with a Shari’ah platform focused on money markets. As an exchange, Bursa Malaysia is committed to support, manage and even drive initiatives that can augment the growth of the Malaysian Islamic market.”

Source: Bursa Malaysia, 17.08.2009

Filed under: Asia, Exchanges, Islamic Finance, Malaysia, News, Services, , , , , , , , , ,

Bursa Malaysia Inks Commodity Murabahah Agreement With Industry Players Under MIFC Initiative – Multi-Commodity, Multi-Currency Trading Platform To Facilitate Shariah-Based Financing And Liquidity Management

Bursa Malaysia and over 26 palm oil commodity suppliers, financial institutions and trading participants, today signed a Memorandum of Participation to collaborate in the Shariah commodity trading platform, Commodity Murabahah House (CMH), which is aimed at facilitating liquidity management and the financing of Islamic financial and investment instruments.

Commodity Murabahah House (CMH), a Malaysia Islamic International Finance Centre (MIFC) initiative operated by Bursa Malaysia’s fully Shariah compliant wholly-owned subsidiary, Bursa Malaysia Islamic Services Sdn Bhd, is an international spot commodity platform which facilitates commodity-based Islamic financing and investment transactions under the Shari’ah principles of Murabahah, Tawarruq and Musawwamah. Initial trades will use crude palm oil to be followed by other Shari’ah approved commodities covering both soft and hard commodities. At present, trades will be Ringgit-denominated whilst efforts are being undertaken to make it multi currency capable, providing more choice, access and flexibility for international financial institutions to participate in this market.  This trading platform, which is fully electronic, is the world’s first end-to-end Shari’ah-compliant commodity trading platform designed with the main purpose of serving the Islamic financial markets.

Dato’ Yusli Mohamed Yusoff, Chief Executive Officer of Bursa Malaysia said, “We are the first in the world to innovate a Commodity Trading Platform infrastructure using crude palm oil as the underlying commodity.  We expect the innovation of this web-based and fully automated platform to change the way most Islamic financial institutions transact commodity murabahah going forward.

This infrastructure is set to complement our capital and money market offerings. The players, which range from financial institutions, CPO producers to trading participants, will benefit from additional revenue stream, stemming from the low liquidity risk element that is apparent in the financing structure of CMH.”

Dato’ Yusli added, “The implementation of CMH, planned for August this year, is in line with our efforts to further spur the development of the Islamic market in Malaysia. We are confident that this will give Bursa Malaysia the stature to bring forth its Islamic market’s offerings to the global front.”

Commodity Murabahah is widely used as a money market tool by Islamic banks in the GCC. The concept of Commodity Murabahah involves one party buying commodity at a certain cost and selling it to a customer at a cost-plus-profit basis. The customer will then pay the amount and the profit to the party on deferred-payment basis. The customer then sells back the commodity to the commodity market on spot for cash. The trade involves the sale and purchase of real physical assets.

Source: MondoVisione, 29.07.2009

Filed under: Asia, Exchanges, Islamic Finance, Malaysia, News, Services, , , , , , , , ,

Islamic banks need to ‘revamp model’

Islamic banks in the Gulf Arab region need to adopt a new business model and take on more customers to weather the economic downturn, Ernst & Young’s head of Islamic finance said.

Islamic banks, many of which are investment houses, have been heavily exposed to the real estate market, which saw prices start to plummet at the end of last year.

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Islamic finance: Sukuk market on trial as Islamic bonds default, Euromoney July 2009

They channelled the wealth accumulated during the six year oil boom that ended in mid-2008 into regional real estate through private equity and asset management.

“They relied heavily on selling investments and placements and that business model is being questioned,” Sameer Abdi, who is also a partner at Ernst & Young, said.

The global liquidity constraints will force Islamic banks to look for new customers and sources of funding, including moving into corporate banking, trade finance and retail banking, Abdi said.

Islamic banks cater to investors who do not want to earn or pay interest, viewed as usury under Islamic law.

Some banks have already started to set up funds that enable retail customers to buy sukuk, or Islamic bonds, which in the past were mostly bought by regional banks and large Western financial institutions.

However, analysts have said that it will not be easy for Islamic banks to reduce their heavy exposure to real estate, as they are too small to move into such areas as regional infrastructure and energy projects, which require large investments.

Islamic and conventional banks in the region still have more of the financial crisis ahead of them, Abdi said. “The financial industry is not out of the woods in the Middle East at all, in fact we are still in the middle of our crisis,” he said.

“It’s going to take some support from regulators and governments to actually come out of the crisis, and that may be six to nine months away, at least.”

The restructuring of the debts held by troubled Saudi family groups Saad and Algosaibi could heavily impact many banks in the region.

The United Arab Emirates alone face at least $3bn in potential losses from their exposure to the two groups, an Emirati newspaper reported on Thursday.

Abdi also said corporate defaults of private sector companies in the region were very likely over the next six months.

Source:Gulf times, Reuters/ Manama, 06.07.2009

Filed under: Islamic Finance, News, Services, , , , , ,

New FTSE Bursa Malaysia Palm Oil Plantation Indices To Boost Exchange’s Standing As Key Commodity Centre

Bursa Malaysia Berhad (Bursa Malaysia) and award winning global index provider, FTSE Group (FTSE), today announce the launch of the FTSE Bursa Malaysia Palm Oil Plantation Index Series. This series enables investors to gain exposure to the long term growth potential of the lucrative, billion dollar palm oil industry, both in Malaysia and the Asian region. This is one further step to cement Bursa Malaysia’s position as a key centre for commodities-related capital market offerings.

The three indices launched today are the:

  1. FTSE Bursa Malaysia Palm Oil Plantation Index in Ringgit Malaysia based on the FTSE Bursa Malaysia EMAS universe;
  2. FTSE Bursa Malaysia Asian Palm Oil Plantation Index in Ringgit Malaysia; and
  3. FTSE Bursa Malaysia Asian Palm Oil Plantation Index in US Dollars.

Both Asian related palm oil plantation indices are based on the universes of developed, advanced emerging and secondary emerging countries as classified by FTSE in the Asia Pacific region excluding Japan, Australia and New Zealand, and are available in gross and net of tax versions.

These three indices allow investors to track the performance of listed companies which derive substantial revenues from palm-oil related activities. The series also supports the creation of Exchange Traded Funds (ETFs), structured products and other index-linked investment instruments.

Chief Executive Officer of Bursa Malaysia, Dato’ Yusli Mohamed Yusoff said, “The introduction of these new palm oil plantation indices is an exciting opportunity that will complement and strengthen Malaysia’s existing position as a significant player in the global palm oil industry. These palm oil plantation related indices will complement our strong footing in palm oil commodities related sector and strengthen our crude palm oil futures market as it bridges between the cash and derivatives markets for hedging and arbitraging opportunities. In short, the new indices elevate the profile of Malaysia’s palm oil industry and also establish Bursa Malaysia as a centre for commodity trading.”

Paul Hoff, Managing Director, Asia Pacific for FTSE Group said, “We are seeing evidence of increased interest in agricultural/commodity investment as investors look for niche opportunities. We are pleased to be working with Bursa Malaysia again, this time to develop the FTSE Bursa Malaysia Palm Oil Plantation Index Series to capture this unique sector.”

For more information on FTSE Bursa Malaysia Palm Oil Plantation Index Series, please visit http://www.bursamalaysia.com/website/bm/market_information/ or www.ftse.com/bursamalaysia.

Source:MondoVisione, 18.05.2009

Filed under: Asia, Data Vendor, Exchanges, Islamic Finance, Malaysia, News, , , , , , , , ,

SunGard opens Kuala Lumper GL Net hub

SunGard has opened a new hub of its GL Net low-latency market data and order routing network in Kuala Lumpur, Malaysia.

The hub, which is the eighth to be opened in the Asia Pacific region, will provide international investors with access to Bursa Malaysia, the Malaysian equity and derivatives exchange. Local financial institutions will also gain access to SunGard’s GL Net network of brokers, and be able to take advantage of direct market access execution services to more than 110 exchanges and liquidity pools.

Bursa Malaysia operates a fully integrated exchange offering trading, clearing, settlement and depository services. It is one of the largest bourses in Asia, with almost 1,000 listed companies. By opening this new GL Net hub, SunGard will help international investors send electronic orders cost-effectively to Malaysian brokers via GL Net, helping them trade on the Bursa Malaysia and create new investment opportunities.

Vincent Burzynski, chief product officer for SunGard’s global trading business, said: “The launch of this new hub helps us to address an increasing demand from our Asia Pacific customers for greater direct market connectivity in the region. It will also help international investors to access emerging markets in the region through the Bursa Malaysia. It is a further demonstration of our strategy to expand the GL Net network, supporting the growth of electronic trading and helping customers to find new investment opportunities.”

Source: SunGard, 23.04.2009

Filed under: Asia, Exchanges, Islamic Finance, Malaysia, Trading Technology, , , , , , , , ,

Singapore’s Take on Islamic Finance

Singapore’s plunge into the Islamic finance scene did not come as a surprise to many in the industry. Seeing the Islamic finance industry take-off in Malaysia and with Hong Kong and Indonesia playing catch up, Singapore’s obvious move was to take on this ethical form of financing with formidable force. Despite being the first Asian country to fall into a recession, which prompted the government to declare the situation as the worst ever for it, the Lion City was still optimistic about launching its first Sukuk at a signing ceremony last month. Eureka – Islamic_Finance_News article

Monetary Authority of Singapore (MAS) managing director Heng Swee Keat described the Sukuk as the Shariah-compliant equivalent of Singapore Government Securities (SGS) and said it was of the highest credit standing. He assured investors that it would be given equal regulatory treatment as SGS, such as qualifying as an asset in the computation of capital and liquidity requirements, and as eligible collateral for tapping MAS’ liquidity.

“MAS is committed to the facility, issuing to meet the needs of financial institutions that are carrying out or plan to carry out Shariah-compliant activities in Singapore, as this will strengthen their ability to meet their capital and liquidity requirements.” He added.

Research and consulting firm Cerulli Associates released a report recently on the Islamic finance industry in Singapore, focusing on the Islamic funds available in the republic. According to it, Hong Kong and Singapore have been financial services hub rivals in Asia and their competition has now extended to Islamic finance. The report states that the Islamic finance is not to cater for their relatively small Muslim populations, but rather to encompass all areas of financial services as well as attract the petro-dollars from the Middle East.

Describing Hong Kong’s and Singapore’s effort as wholesale as opposed to Malaysia’s and Indonesia’s “more retail approach”, Cerulli said the Singapore government had decided several years ago that as trade with its Middle East counterparts increased, there would be a need for an Islamic finance industry. Its Middle East trade doubled to US$37 billion in four years to the end of 2007.

“MAS has been proactive in trying to create a level playing field for the conventional and Islamic approaches – in 2005, for example, it remitted the additional stamp duties that Islamic financing arrangements on property were incurring, and allowed banks to offer Murabahah financing,” the report stated.

Cerulli added that income tax and goods and services tax (GST) treatments for Shariah-compliant financing arrangements and Sukuk were clarified and given a level playing field as conventional products. “Retail investors in Murabahah are now given the same regulatory protection under Singapore’s Bank Act as any conventional depositor. And a 5% concessionary tax rate was announced in February 2008 on income derived from qualifying Shariah-compliant financial activities, including lending, fund management, insurance and reinsurance.”

Cerulli noted that the significant step in Singapore’s Islamic finance push came with the formation of the Islamic Bank of Asia (IB Asia) in June 2007. Singapore’s largest bank, DBS, holds the majority share in the bank together with Middle East investors. IB Asia has since opened a representative office in Bahrain. It focuses on Shariah-compliant commercial banking, corporate finance, capital market and private banking services.

According to Cerulli, the Sukuk issuance working on reverse inquiry that would be issued based on the needs of the republic’s financial institutions could boost the development of Islamic finance. However it would not be the republic’s first issuance as there have been several other issuances such as the MBB Sukuk Inc established by Maybank that raised US$300 million two years ago.

Cerulli observed that Singapore has its own Shariah index, the FTSE SGX Asia Shariah 100 Index, which is designed to be used as a basis for exchange-traded funds and over-the-counter trading instruments although it maintained that none have yet been launched. “There are currently six managers with Shariah funds registered in Singapore who are collectively responsible for assets worth about US$470 million, although this figure was somewhat higher prior to the current financial crisis.”


Click on the image for an enlarged preview

Shariah-compliant funds have also found a place in Singapore. Cerulli states that NTUC Income, a cooperative insurance society and a leader in life and general insurance with more than 1.8 million policyholders, currently offers the republic’s two largest Shariah funds.

The Amanah Bond Fund is managed by RHB Investment Management and CIMB-Principal Asset Management. It had US$157 million under management at the end of October last year. The other fund is NTUC’s Amanah Equity Fund, described by Cerulli as a global passive product, which is managed by State Street Global Advisers and has US$164 million under management. NTUC also offers a Takaful fund, jointly managed by NTUC Income and Wellington International Management with US$55 million under management.

Cerulli’s report also notes that other local players offering funds include UOB Asset Management, Singapore Unit Trusts (SUT) and Swiss-Asia Financial Services. UOB Asset Management offers the Afdaal Asia Pacific Equity Fund, for which CIMB-Principal Asset Management is the advisor. SUT, a member company of Malaysia’s Permodalan National Berhad (PNB) Group, has two Shariah-compliant funds: the Ethical Value Fund and Ethical Growth Funds, both being global equity products; while Swiss-Asia Financial Services launched its first Shariah fund, an absolute return Asian equity product named the Mashriq Fund, in July 2006.

According to Cerulli, the largest Shariah-compliant investment product sold in Singapore to-date was by a group called Pacific Star Investment and Development, which sold the now closed Baitak Asian Real Estate Fund at US$600 million. On offshore funds, Cerulli states that the available Shariah-compliant funds from the offshore managers are the DWS Noor range, including an Asia-Pacific equity fund, China equity fund, Global select equity fund, Japan equity fund and a precious metals securities product. “All are sold in Singapore (though they are domiciled in Ireland), as are CIMB Islamic’s Asia-Pacific equity fund and several HSBC products, domiciled locally under the HSBC-Link Ethical brand,” it added.

Source: Eurka Hedeg, Islamic Finance News, 22.04.2009

Filed under: Asia, Banking, Indonesia, Islamic Finance, News, Services, Singapore, , , , , , , , , , , , ,

Challenges and opportunities for Islamic finance; BMB Islamic UK

Humayan Dar, chief executive officer of BMB Islamic UK, discusses new developments in Shar’iah-compliant finance.

BMB Islamic was founded in 2007 in London to provide Shar’iah advisory and structuring services. It enlists Shar’iah scholars and Islamic financial consultants to guide investors, lawyers and other investment professionals.

What new developments are taking place in Islamic finance?
There is little in the world of conventional finance that Islamic finance cannot replicate – whether in terms of financial instruments or funds. Sukuk — similar to bonds — are of course very well established now, and going forward it will be interesting to see which jurisdiction, whether Malaysia or the Middle East, will evolve as the dominant one for issuance and trading. But even sophisticated fund structures, such as private equity, hedge funds or specialist funds, are being set up so they are Shar’iah-compliant. We, at The BMB Group, have recently formed a private equity joint venture with Emerging Markets Partnership (EMP) to invest in emerging markets. BMB Islamic is also helping an investment bank to set up a Middle East infrastructure.

What about regional cooperation?
On February 18, The BMB Group formed a partnership with the International Zakat Organisation (IZO) to set up and manage a 2 billion Malaysian ringgit Global Zakat and Charity Fund, which will manage zakat (the act of giving alms to the poor) and other charitable funds to alleviate poverty in the 57 states which are members of the Organisation of the Islamic Conference. It is a long-awaited initiative. There has been inevitably a huge emphasis on Shar’iah-compliance in Islamic banking and finance, but the announcement of a Global Zakat and Charity Fund is the beginning of a new Islamic financial trend, which favours social responsibility and community development.

Will there be a resolution of what seems to be conflicting jurisdictions and centres for Shar’iah interpretation, and also competing centres for Islamic business?
In Malaysia there is strong inherent demand for Islamic products and the country has rapidly developed as a centre for Islamic finance. Perhaps most importantly, the government has provided institutional support, particularly through Bank Negara Malaysia (the central bank) but also through favourable legislation and tax treatment, for Islamic products. Middle Eastern financial houses have recognised this, and hence have entered the Malaysian market either directly or through partnerships and joint ventures. Malaysia is also correctly perceived as a gateway to other Asian markets.

Significantly too, Shar’iah-compliant financial products are now seen as competitive alternatives for non-Islamic people, who will happily buy them if they prefer the returns or their risk profiles compared with conventional products. Islamic finance is in the mainstream in Malaysia and is likely to become so elsewhere in the world — even Europe. Product standardisation will come through time, not by edict but through a wide acceptance of a particular norm.

What about Indonesia?
Indonesia, with its vast Muslim population obviously has tremendous potential. Once the institutional framework is in place — and already the government has issued its first sukuk — then the market should develop quickly. Perhaps the authorities need to be more like Malaysia and be more proactive and encouraging. Islamic finance will expand to countries and regions where there is a friendly regulatory environment, supported by a clear legal framework.

How will this year pan out, and what will be your main role?
This year will be tough, as it will be for all financial markets. However, pressure on government budgets, especially in the Middle East due to the lower oil price, means that some significant sukuk issuance is likely.

But, actually, the current conditions also offer the potential to take advantage of new opportunities and provide new products. With so much uncertainty, investors are seeking alternative havens for their capital, while depressed asset values of all kinds means there is a chance to build portfolios from a reasonable cost base. For instance, Islamic art funds are becoming popular.

An essential role for us is to monitor the Shar’iah-compliance of funds which are advertising and marketing themselves to Islamic customers. Integrity and credibility is all important.

Source: FinanceAsia.com, Rupert Walker , 26.02.2009

Filed under: Banking, Islamic Finance, News, , , , , , , , , ,

BMB Group to partner with International Zakat Organization to establish and co-manage a Global Zakat & Charity Fund

International Zakat Organization (IZO) announced today its partnership with the prestigious BMB Group to establish and co-manage a multi-billion Global Zakat and Charity Fund. In his address at the signing ceremony, the Honourable Dato’ Seri Dr Ahmad Zahid Hamidi, Minister in the Malaysian Prime Minister’s Department and Chairman of the Board of Directors of IZO, said, “The purpose of IZO is to uphold Zakat as a tool for economic development, social Takaful, the enhancement of solidarity and the promotion of cooperation between Muslim communities and countries around the world, especially for the sake of Ummah.

The Global Zakat and Charity Fund will offer us the required transparency in operations and financial expertise for the management of funds.” He further added that “Every Muslim should take into consideration the fact that the whole Muslim nation, both individuals and governments, has the responsibility to solve the collective crises of poverty, corruption and inequality suffered by millions of Muslims throughout the Islamic World. The only way to solve these crises is through the duty of Zakat. The implementation of Zakat will be in accordance with the Quran and Sunnah. We will see how a properly implemented system can solve the current economic problems of not just Muslims, but of the whole world.”

The proposed Fund will manage Zakat and other charitable funds to alleviate poverty in the member committees of the Organisation of the Islamic Conference (“OIC”). “It is a long-awaited initiative,” said Dr Humayon Dar, CEO of BMB Islamic, a subsidiary of The BMB Group. “There has been inevitably a huge emphasis on Shari’a compliance in Islamic banking and finance, but the announcement of a Global Zakat and Charity Fund is the beginning of a new Islamic financial trend which favours social responsibility and community development.”

OIC has 57 member states of which some have already committed themselves to IZO and its various initiatives. In addition to co-managing the fund, The BMB Group will assist in involving the remaining governments in this special project. The expected size of the fund will be Two Billion Malaysian Ringgit in the current calendar year.  Mr. Mohammad Hassan Esa, Managing Director and CEO of IZO, who has played a pioneering role in establishing the IZO, was thrilled by the prospect of contributing to poverty alleviation among poor Muslim communities. He commented “Zakat is a tool that can single-handedly eradicate poverty not only from the Muslim world but from the entire world. The only condition is that we collect and manage the funds efficiently. The Global Zakat and Charity Fund is a step towards achieving that efficiency.”

The proposed fund will be co-managed by the IZO and The BMB Group, which benefits from Shari’a advisory and structuring capabilities of BMB Islamic. BMB Islamic was recently voted voted the Best Shari’a Advisory Firm for the year 2008 at the IFN Awards. The fund will invest in community development projects with an emphasis on sustainability. The three major areas to be targeted are: (1) income generation through the provision of affordable financing to small and medium enterprises; (2) development of social enterprise through the establishment of hospitals, educational institutions and housing associations; and (3) the provision of relief and emergency funding.

Rayo Salahadin Withanage, Chairman and CEO of The BMB Group commented, “The BMB Groups lead role in this initiative reinforces our heart found commitment to Islamic communities around the world. At this juncture in history where the world faces serious economic challenges, it is important for Muslims around the world to unite behind the common good of helping with the social, economic and environmental challenges that face our planet. We are delighted to be part of the IZO initiative.”

Source: BMB/UpStream Asia 24.02.2009

Filed under: Islamic Finance, News, , , , , , , , ,

Malaysia raises profile as an Islamic fund hub

Malaysia now has more sharia funds than Saudi Arabia, but is still second in terms of assets under management. Malaysia’s efforts to promote itself as a global Islamic investment hub are paying off.

The country has overtaken Saudi Arabia in terms of the number of locally domiciled sharia funds, and is second to the huge Middle East market in terms of sharia assets under management (AUM), based on data from financial services research firm Cerulli Associates.

As of November 2008, sharia funds domiciled and managed in Malaysia totalled 145, compared to just 131 in Saudi Arabia. These range from investments in money markets and sukuks (bonds) to regional and global equities.

Malaysia has, over the past few years, worked to establish itself as a centre for sharia fund manufacturing, in line with its efforts to promote itself as a global Islamic investment hub. Malaysia now possesses the most highly developed regulatory structure for Islamic finance in the world, according to Cerulli.

So far, Malaysia has attracted eight international sharia fund managers by offering a host of tax and other incentives.

However, in terms of sharia AUM, Saudi Arabia is still the clear winner worldwide. Sharia AUM in Malaysia has grown from $1.4 billion in 2003 to $4.6 billion in November 2008. That’s nevertheless just a fraction of Saudi Arabia’s $13.9 billion in sharia AUM. Malaysia’s sharia AUM is also small compared with the estimated $40 billion in AUM of conventional funds managed onshore.

“Malaysian-domiciled sharia funds are still unable to compete with Saudi funds in terms of asset size,” says Ken Yap, Singapore-based head of Asia-Pacific research at Cerulli.

To illustrate his point, Cerulli data shows that the AlAhli Saudi Riyal Trade Fund in Saudi Arabia is the world’s largest sharia portfolio, with $3.6 billion in assets. In contrast, Malaysia’s largest sharia portfolio — Public Ittikal Fund — has $421 million in assets.

“While the Malaysian sharia market has shown impressive growth, managers need to do more to build up assets in each of its sharia funds, rather than simply continuing to launch more funds,” says Shiv Taneja, London-based managing director at Cerulli. “This means marketing sharia funds to high-net-worth individuals and institutions, and working with the banks, including Islamic banks, to improve sharia fund distribution to the public.”

Saudi Arabia’s obvious advantage over Malaysia, Cerulli’s Yap notes, is the deep pockets of its institutional, high-net-worth and retail investors.

In Malaysia, the focus has been mostly on retail investors — understandably so because they are an easy target for the asset management arms of banks, for example. Asset management companies with a conventional funds business in Malaysia are also setting up sharia units and they are targeting existing clients.

“The sharia funds in Malaysia are focused more towards the retail client base, which needs more variety and, thus, fund managers need to launch more funds. In Saudi Arabia, the funds are focused more towards the wholesale client base,” says Trica Sum, a Singapore-based analyst at Cerulli.

Both Saudi Arabia and Malaysia are capable of attracting and managing offshore funds, but the Gulf state has done more to cultivate that market over the years.

Cerulli’s Yap believes that in the near-term the potential for sharia AUM growth in Malaysia still rests with the retail market. Over the long-run, however, he says there is strong potential for growth in the offshore market of sharia firms in Malaysia, the demand from institutional investors and pension funds in Malaysia, and in new businesses from new Islamic fund management company license holders.

Malaysia’s Securities Commission has awarded eight foreign Islamic fund management licenses to Aberdeen Islamic Asset Management, BNP Paribas Islamic Asset Management, Nomura Islamic Asset Management, Kuwait Finance House (Malaysia), DBS Asset Management, CIMB-Principal Asset Management, Global Investment House and Reliance Asset Management.

The Malaysia government allows 100% foreign ownership of Islamic fund management companies, in line with its bid to attract more key fund players to the country. The incentive is part of ongoing liberalisation measures in Malaysia’s capital market as well as being aimed at complementing the broader Malaysian International Islamic Finance Centre (MIFC) initiatives of positioning the country as a hub.

Islamic fund management companies are allowed to invest all their assets overseas and will be given income tax exemption on fees received until 2016. They will also be able to tap into M$7 billion ($2.1 billion) in seed money from the Employees Provident Fund, the national pension fund for the private sector in Malaysia. Tax incentives are also being offered to existing stockbrokers that set up Islamic subsidiaries.

Cerulli estimates that global sharia fund assets totalled around $35 billion in October 2008 and had been growing at 23% over the past five years, well ahead of conventional mutual funds. Although this rate is expected to ease during the course of the global financial crisis, the firm believes Islamic finance has only started to take root in many Muslim nations and has plenty of room for expansion.

Source:AsianInvestor, 19.02.2009

Filed under: Islamic Finance, Malaysia, News, Services, , , , , , , , , , , , , ,

BMB Islamic wins IFN award for best Shariah Advisory Firm

BMB Islamic, part of the Cayman Islands global alternative asset management firm BMB Group, was named as the Best Shariah Advisory Firm in Islamic Finance News (IFN) Poll conducted by Kuala Lumpur based Redmoney Group.

This award reiterates BMB Islamic’s leading role in the increasingly competitive global Islamic market. The Islamic Finance News (IFN) Awards are the most transparent and competitive awards in Islamic finance. They are based on a global poll in which nearly 2,500 votes were cast this year by leading practitioners and participants in the industry.

BMB Islamic will receive the prestigious award at two special Awards ceremonies: A ceremony for IFN Asia readers will take place on the evening of 12th February at the Mandarin Oriental Hotel in Kuala Lumpur followed by another at the Grand Hyatt Dubai on 3rd March 2009 for IFN Middle East readers.

Dr Humayon Dar, CEO of BMB Islamic UK Limited commented, “BMB Islamic are proud to be recognised by the global Islamic finance industry as the best team of Shariah technicians. We remain committed to Shariah-authentic innovation to offer ‘best of the best’ financial solutions to institutions offering Islamic financial services”.

Source: UpstreamAsia, 12.02.2009

Filed under: Banking, Islamic Finance, News, , , , , ,

Islamic Finance Shows Resilience As London Consolidates Position As Key Western Centre

The global market for Islamic financial services rose by 37% to $729bn at end-2007. In 2008, IFSL’s Islamic Finance report notes that the industry has felt the influence of the credit crunch and downturn in the global economy – Sukuk issuance has more than halved and the value of equity funds has fallen. Islamic banks, however, have been less affected than many conventional banks as they are prohibited from activities that have contributed to the credit crunch, such as investment in toxic assets and dependence on wholesale funds.

London has been consolidating its position as the key western centre for Islamic finance in 2008. Two Islamic banks, Gatehouse Bank and European Finance House, have been granted licences bringing to five the number of fully Sharia compliant banks in the UK. Principal Insurance became the first Shariah compliant independent company authorised to offer Takaful to UK residents. In capital markets, four new exchange traded funds and two new equity funds were launched.

IFSL’s report indicates that the UK’s offering includes a total of 22 banks, far more than in any other Western country. Professional services are provided by 18 law firms and the Big Four accounting firms. A cumulative total of 18 Sukuk issues raising $10bn have been listed on the London Stock Exchange, second only to Dubai. With 55 institutions offering educational and training products in Islamic finance, the UK has more providers than any other country worldwide.

Duncan McKenzie, IFSL’s Director of Economics said “The UK has benefitted considerably from supportive government policies intended to put Islamic services on the same footing as conventional services. Evidence of London’s growing role in Islamic finance is shown in the UK being the only western country to feature prominently, 8th with assets of $18bn, in a global ranking of Sharia compliant assets by country.”

Sir Andrew Cahn, UK Trade & Investment’s Chief Executive Officer said: “Despite its origins overseas, Islamic finance has found a natural home in the UK. Though no sector is immune to the global financial crisis, Islamic finance has shown great resilience. It is important we continue to work with our Islamic finance partners to maintain our position as the leading western centre for Islamic finance service providers.”

Source: Mondovisione, Exchange News 09.02.2009

Filed under: Islamic Finance, News, , , , , , , , , ,

Thai bourse to launch Islamic index in Q2

The Stock Exchange of Thailand plans to launch an Islamic Index in the second quarter of this year, the bourse’s Group Head of Market Development Santi Kiranand said Monday.

The index, to be called the FTSE SET Shariah Index, will comprise 55 stocks with a combined market capitalisation of around THB1.7 trillion (US$49 billion), equivalent to 47% of the total stock market, Santi told reporters.

The bourse is scheduled to meet investors in the United Arab Emirates and Abu Dhabi in the second half of this year to promote the Islamic index, he added.

The exchange also plans to launch a social responsibility index in the third quarter. Stocks under this index would account for 10% to 20% of total market capitalisation, Santi said.

Source: Intellasia | Dow Jones, 04.02.2009

Filed under: Exchanges, Islamic Finance, News, Thailand, , , , , , , ,

Global Megatrends 2009: Ernest & Young Analysis

Download report Global Megatrends 2009 EY

Each year, the EY Global Strategy Team conducts an analysis of external trends to inform the Global Executive’s discussion about priorities and initiatives for the coming year.

The report provides a good overview of important external influences affecting all organizations.

While the EY megatrends document was previously for limited distribution, this year the report is shared more broadly since the issues it addresses are no doubt also on the top of mind for many.

Source: Ernest & Young, 29.01.2009

Filed under: Asia, Banking, Energy & Environment, Islamic Finance, Latin America, Library, News, Wealth Management, , , , , , , , , , , , , , , , , , , , , , , , , , ,

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