An article that provides an introductory look at the Islamic financial industry provides a few good points that are not frequently expressed explicitly about the susceptibility of the Islamic finance industry to falling asset prices.
"However, in spite of these facts, following Islamic principles is not enough for banks to get the total protection from the financial crisis. Islamic finance is so intertwined with the global financial system that they also can’t avoid problems.
Many Islamic banks have invested their funds in equity. When the prices for real estate go down, their portfolios also go down. Countries involved in computer and electronics manufacturing (such as Malaysia) have been hit by competitive devaluation and reduce of export.
So even though Islamic countries have not suffered from the credit crunch, they have suffered from asset valuations and its financial effect.
Kuwait Turkish Participation Bank (KFH-Turkey) received approval to open a branch in Germany. The entrance into the European Union through Germany is a first. Prior to this announcement, Islamic banks wanting to enter into the EU started in the UK because of the FSA's accommodative stance towards Islamic financial institutions and the legal and regulatory changes which places Islamic finance on equal footing with conventional financial institutions.
Many Islamic banks in the GCC are converting government deposits into Tier 2 capital in order to strengthen their capital position. The two most recent banks to convert are Emirates Islamic and Abu Dhabi Commercial Bank.
- Russian bank VTB may become the first Russian company to raise funds using a sukuk.
- There is an interview with the CEO of the only Islamic bank in South Africa.
- A Russian mufti calls for increased use of Islamic finance.
- An article describes how the new Shari'ah-compliant gold ETC is monitored from a Shari'ah-compliance perspective, including unannounced reviews.
- The decision about whether or not to merge Amlak and Tamweel, Dubai's struggling Shari'ah-compliant mortgage providers is in the final stages and liquidation of the two institutions is not being considered. Tamweel announced that it had not seen an increase in the numbers of foreclosures despite deteriorating economic conditions.
- The IFSB summit that will be held in Singapore will focus on whether the current structure of the Islamic financial services industry will need to change as the industry matures and grows.
- Zawya Dow Jones interviewed the CEO of the Asian Finance Bank.
- The president of the Islamic Development Bank is interviewed before a conference in Kazakhstan. The president, in a different interview, said that the bank is planning to issue a $500 million sukuk in the next few months.
- The head of Kuwait Finance House (Malaysia) says that assets in Islamic funds will decline in the near term but grow over the longer term. He also said that the global economic crisis will lead to more local currency sukuk instead of being issued in dollars.
- Global Investment House released a report on Bahrain's Islamic finance industry and said it expects the industry to rebound in 2009. During 2008, the volume of sukuk issuance fell to $700 million from $1 billion in 2007.