Sukuk; Islamic investing; faith and finance; Sunrise Equities' collapse

The sukuk market slowdown is more a case of a liquidity issue and was not created by the AAOIFI Shari'ah board ruling, according to Islamic finance professionals in the GCC.

Gerald Al-Fil, a reporter in the GCC, describes the reasons that Shari'ah-compliant indices have outperformed the market as a whole, as well as some pitfalls like being overconcentrated in certain sectors like basic materials.

The recent al-salam sukuk from the Central Bank of Bahrain was only slightly oversubscribed, compared with issues last year which were many times oversubscribed. Malaysia may issue a second sovereign sukuk. S&P credit analyst Mohamed Damak discusses the potential for sukuk issues coming out of Africa.

The Times has a lengthy comment on the role of money and interest in the three large monotheistic faiths, Christianity, Islam and Judaism.

Sunrise Equities, an Islamic finance company in Chicago, collapsed recently and the CEO Salman Ibrahim, disappeared leaving the clients and investors in the firm with losses of $50 million.

Faith-based investing grows

The Financial Times, in a front page article, report that the highest-performing religiously-based fund was the Christian Timothy Fund, which reported growth of 17 per cent during the previous year and has averaged 18.6 per cent per year for the previous five years. Shari'ah-compliant fund manager Amana Mutual Funds Trust saw its Income fund come in second with growth of 14.1 per cent for the previous year.

The blog at Christianity Today remarks on recent news that AAOIFI Shari'ah board chairman Sheikh Taqi Usmani believes up to 85 percent of ijara sukuk, those with repurchase agreements, may be Shari'ah-non-compliant. The conclusion of the post by Rob Moll is that "Christians should pay attention to this debate. While the church has long since become comfortable with loaning money with interest, it can be helpful to see another religious group wrestle with modern capitalism. After all, why was it that for centuries Christians forbade usury and then heavily regulated it? Hmm, maybe the mess created by the sub-prime mortgage lenders has something to do with it."

Islamic banking in the West

The Islamic Bank of Britain today announced a halal business loan program in Bolton. While the loans will all be halal, they will be available to entrepreneurs of all faiths. The £25,000 ($50,365) will be available for business interested in halal financing and those that do not engage in haram activities like selling alcohol or tobacco.

A research professor at the University of Toronto's Wycliffe College provides an interesting insight into the historical prohibition on interest in non-Muslim faiths. Professor Stackhouse also provides a historical warning about the tendency for some to subvert the rules against charging interest through various unnecessary transactions. It is an important reminder that when there is a rule prohibiting something, some people may try to subvert the rule while appearing to be in compliance.

Christian business practices similar to Islamic business practices, Islamic finance can help with social development

Islamic microfinance could be very profitable, as well as successful in reducing poverty according to a speaker at a conference in Bahrain. The Islamic Development Bank wants to "standardise and regulate" the collection of zakat. This would be a mistake, I believe, and would hamper effective Islamic microfinance because it would concentrate funding in IDB-supported institutions, which may not be able to create the most effective model. Allowing individual Muslims to distribute their zakat to organizations that are able to use zakat correctly keeps organizations efficient and innovative (within the bounds of the Shari'ah).

The Financial Times has a story about a growing number of Western executives who want to bring their (Christian) faith into the workplace. The description of how Christianity fits in with capitalism overlaps with many of the restrictions in the Qur'an and Sunna:

Christians who look on capitalism as an embodiment of New Testament principles - of justice, individual freedom and responsible risk-taking - might see now as a good moment to speak up.

The Accounting & Auditing Organization of Islamic Financial Institutions (AAOIFI) secretary-general Dr. Mohamed Alchaar draws a distinction between Islamic financial products and Islamized financial products with a distinct preference for the former. He said, "We have to differentiate between what we call Islamic products and what we call Islamised products - products that were made Islamic. These [the latter] are conventional products made into Islamic products. This type of product I believe is not the right way to go". He followed by saying that Islamization of financial products, the "taking of conventional products and fitting things around it [...] and calling them Islamic is not sustainable".

International Islamic Finance Market chief executive Ijlal Ahmed Alvi believes it will take five years to integrate the GCC and non-GCC sukuk markets due to different standards and a lack of transparency in existing sukuk.

Islamic finance should focus on social development in addition to economic growth.

Adeem Investment, the firm which bought Aston Martin earlier this year, wants to open up an Islamic bank in the U.K.

Islamic financial services have been hampered in Thailand due to tax rules and a lack of understanding about Islamic finance. Thailand plans on working with its southern neighbor Malaysia on issuing sukuk to fund up to $50 billion (1.63 trillion Thai baht) infrastructure projects.