Thursday, March 29, 2007

Islamic finance not creating new entrepreneurs, new liquidity management tools, EPF seeks partners, Islamic capital markets

Islamic finance has not created new entrepreneurs

Experts in Islamic finance believe that, contrary to expectations, the rapidly growing Islamic finance market has not created many new entrepreneurs, instead creating greater wealth for bankers and lawyers and has served the already-banked market. Creating shari'ah-compliant microfinancing will allow banking services to become more widely available, but this has not been developed. One of the Institute's priorities is creating a model for halal microfinance that will be as successful as conventional microfinance but using an equity-based rather than a debt-based model.

KFH-Bahrain to start Shari'ah Compliant Overnight Fund (SCOF)

The Bahraini branch of Kuwait Finance House will launch the SCOF as a tool for Islamic banks to manage short-term liquidity through investments in real estate companies. They will work in partnership with Fortis Direct Real Estate.

EPF to talk to potential strategic partners; KFH expected to be one of them

Speculation is still strong that Kuwait Finance House (KFH) will be a strategic partner with Employees Provident Fund in Rashid Hussain Bhd. The Financial Times also pointed to Barclays, RBS or an unnamed Japanese bank.

Islamic Capital Markets

There is a comment in the Business Times (Malaysia) advocating for development of parallel Islamic capital markets which operate along side conventional capital markets.

GCC and Asia

Dr. Zeti Akhtar Aziz, governor at Bank Negara Malaysia, the Malaysian central bank, highlighted the growing links between the Gulf Cooperation Council and Asia which has been reinforced by the growth of Islamic finance.

Other news

Kuwait Finance House (Malaysia) Bhd does not plan any more acquisitions and will focus on organic growth instead following its unsuccessful bid for Utama Banking Group Bhd 32.8% stake in Rashid Hussain Bhd. KFH also plans to unveil new products in the second and third quarters of this year.

Islamic finance requires different regulation to account for Shari'ah risk, asset price risk, rate of return risk and the investor-manager relationship between Islamic banks and their clients.

Asian Finance Bank plans RM1 billion ($289 million) in investment funds by the end of 2006 with most of these invested in real estate.

The Malaysian Securities Commission will now release its list of Shari'ah-compliant securities on the last Friday of May and November. Previously, the list was released in April and October.

The International Islamic Financial Market (IIFM) will continue to work on new projects

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