Hong Kong enters Islamic finance, new U.S. investment from Bahraini Islamic investment bank, profile of founder of Amana Funds

Hong Kong is beginning to work to enter the Islamic financial markets, despite being several years behind nearby Kuala Lumpur and Singapore in the market. The first move the city is taking is to establish an Islamic bond (sukuk) market to challenge Malaysia, which has been leading the way, particularly within the Asian market.

Sukuk issuance worth $10 billion will likely be relaunched in 2008 including issues by Tamweel and Amlak Finance, two UAE finance companies who delayed their sukuk issuance because of the global credit crisis that began in August 2007.

A Bahraini-based Islamic investment bank Unicorn Investment Bank has purchased a U.S. microchip firm, Open-Silicon, Inc.

The San Jose Mercury News has a good profile of Nicolas Kaiser, the founder of the Amana Funds, the largest Shari'ah-compliant mutual funds in the U.S. by total assets under management.

Weekly update, December 22nd

Reuters discusses the varied views of religious leaders in the U.S. to the subprime mortgage collapse.

CIMA (the Chartered Institute of Managment Accountants), a U.K.-based organization that is beginning an Islamic finance certification soon says that Islamic finance should be kept separate from conventional finance to ensure that there is no mixing of conventional funds and Shari'ah-compliant funds.

Addressing the recent pronouncement that most ijara sukuk issued in the GCC may not be Shari'ah compliant because of repurchase agreements, Dr. Mohd Daud Bakar, a prominent Malaysian Shari'ah scholar believes that many Malaysian sukuk would meet stricter GCC standards. GCC Shari'ah standards are generally seen as more stringent than Malaysian standards, although many products that originated in Malaysia have later been accepted in the GCC.

The head of Malaysian Islamic Bank CIMB Islamic, Badlisyah Abdul Ghani, believes Malaysia is a leader in Islamic finance worldwide, and described recent entrants into the market like London, Hong Kong and Bahrain as "new kids on the block". The aforementioned cities as well as Dubai are competing with Kuala Lumpur to become global centers in Islamic finance.

The U.K. continues to strive towards becoming a Western hub for Islamic finance by adjusting legislation to put the industry on equal footing with conventional finance.

Weekly news update, December 15, 2007

The U.K. faces a significant challenge from Dubai, Bahrain and Kuala Lumpur to become the sukuk capital of the world. However, the U.K. is looked to as the model for developing Shari'ah-compliant banking from other countries in Europe, like France and Germany, where the Muslim population make up a larger percentage than in the U.K. I discussed this in one of the articles in the recent Institute of Halal Investing newsletter, available in pdf (there is also a link along the right side of the blog).

The ETF issuing company iShares announced the issuance of three Shari'ah-compliant ETFs. The three ETFs track the MSCI World Islamic, MSCI Emerging Markets Islamic and MSCI U.S. Islamic indexes.

GCC-based Islamic investment banks are expanding outside of the GCC-area, as Gulf Finance House's projects in India and Tunisia demonstrate.

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I have not been able to blog daily the last couple weeks. I hope to be able to more often next year, but for the rest of the month, the weekly updates may be all I have time for.
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Weekly update, December 8th

Australia may be one of the winners from the rapid growth of Islamic finance.

The Financial Times released a story last week on the global race to offer Shari'ah-compliant products with competitive returns to conventional products.

Malaysian-based Islamic bank, Asian Finance Bank has received a license to enter the Indonesian market. Indonesia is home to the largest number of Muslims of any country in the world, but the growth of Islamic finance in the country has been low while countries in the Middle East and Malaysia have seen rapid growth.

A delay in legislative changes in Indonesia has delayed the issuance of government sukuk until next year.

New risk management techniques designed specifically for Islamic financial institutions are being developed.

Islamic real estate financing is growing rapidly and many customers are using Shari'ah-compliant alternatives because they feel there is a financial benefit of doing so.

The Shari'ah Supervisory Board of Pakistani Islamic bank Meezan Bank approved products to allow the company to enter into Islamic microfinance.

Second meeting of U.K. Islamic Finance Expert Group

The U.K. Islamic Finance Expert Group (IFEG) chaired by Economic Minister Kitty Ussher had its second meeting where the focus was on enabling the Islamic retail market within the country. The IFEG release included the following statement:

"But there is also an important domestic market which we want to be accessible and open. There are nearly two million Muslims living in the UK and, thanks in part to legislative changes introduced by this Government, the Islamic mortgage market is now worth over £500 million. Going forward, the Government and industry want to continue to do all we can to see the retail market flourish and ensure that everyone - regardless of faith - has equal access to competitive financial products."

In addition to the focus on the retail market, the IFEG, which was set up largely to work on the feasibility of a U.K. government sukuk, the group is also working on how to support the wholesale Islamic finance market.

Special report on Islamic Banking, Islamic accounting qualification from U.K. body

The Pakistani newspaper The News has a special section on Islamic banking.

• "Shari'ah-compliant credit cards"
• "Is Islamic banking in Pakistan really Islamic?"
• "Islamic investment instruments"
• "Interviews on Islamic banking"
• "Special report on Islamic banking"

Malaysia plans on helping neighboring Hong Kong with Islamic finance and opened the door to new sukuk issues from Japan and China

Pakistani bank Meezan Bank is exploring microfinance.

The International Islamic Trade Finance Corporation (ITFC), a part of the Islamic Development Bank will launch on January 10, 2008. The ITFC will provide Shari'ah-compliant trade financing to IDB member countries.

The U.K. Chartered Institute of Management Accountants (CIMA) will provide training in Islamic finance.