Japan will alter regulations to give foreign investors tax breaks on sharia bond dividends, the latest country to pursue Islamic finance to woo investors demanding sharia-compliant assets.
Islamic bond dividends received by foreign investors may be declared tax-free as early as end-2011.
The lowest relative yields on Islamic bonds in more than two years may encourage issuers to tap the market after a 15 percent drop in new sales in 2010, helping revive interest among investors.
The difference between average yields for emerging-market sukuk and the London interbank offered rate narrowed to 282.7 basis points yesterday, the least since August 2008, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index. Albaraka Banking Group BSC, Bahrain’s biggest publicly traded Islamic lender, plans to sell Islamic bonds in the first quarter, while Albaraka Turk Katilim Bankasi AS, a Turkish Islamic bank, may make an offering this year, company officials said this week.
Islamic finance is a trillion dollar industry and has become part of the global financial system. The industry represents around 1.6bn Muslims worldwide as well as non-Muslim investors seeking to diversify their portfolio. Institutional and private investors look to tap into a market that may reach a staggering $5tn, according to forecasts by rating agency Moody’s.
France has skilfully anchored into this dynamic terrain but the question really is — What does France need to do to tap completely into this market and become the capital markets’ centre for Islamic financing in the western world?
What is the "elevator" pitch of Islamic finance to the non-Muslim and the sceptical Muslim? Why do news releases often become articles in Islamic finance?
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