A Medill Reports story about Islamic finance and the above average performance by Islamic mutual funds today. One paragraph was unusual and I think missed something in the ellipsis used in the quoted text:
"Murabaha, an Islamic money market instrument, allows Islamic investors to participate in a wider range of funds because rather than using interest, it sets an agreed-upon value. 'Say I hand you a dollar,' [Shari'ah Capital Managing Director and Treasurer William] Redman explains, 'Let’s agree that in a year’s time, my dollar will be repaid to me as $1.05. That’s perfectly legal… because we agreed on the value.'"
The murabaha contract is not a loan of money with deferred repayment of an amount greater than the principal amount, it is a sale with markup, a subtle difference which is pivotal for the contract's Shari'ah-compliance.
Islamic investment funds are mostly headquartered in the GCC countries with only 5% in the U.S. and 2% in the U.K.
Pervez Said, Head of Islamic Banking at the State Bank of Pakistan, the country's central bank, believes that Islamic banks must work with the central bank to develop Baitul Maal certificates (Islamic Treasury bills) in order to help Islamic banks manage liquidity needs.
Delegates at the World Islamic Infrastructure Finance Conference (WIIFC) predict larger transaction sizes of sukuk in the future following strong growth in sukuk issuance since 2006. 54 percent of sukuk issued in the third quarter of 2007 were denominated in Malaysian ringgit.
Kuwait Finance House (Malaysia) will expand treasury management products into Brunei.
More development of Shari'ah-compliant structured products. Meanwhile, Islamic investing is still taking its first steps in India.
Al Salam Bank-Bahrain CEO Yousif Taqi believes Islamic finance has done well coping with current developments in the financial markets.