As Dubai aspires to become the global hub for Islamic economy, Islamic banking and Islamic capital markets are expected to grow simultaneously, said Adnan Chilwan, CEO of Dubai Islamic Bank. Clearly Islamic capital markets are relatively new phenomena. Earlier it was much simpler that if someone needed finance they would go to a bank and the bank would leverage its balance sheet and give a loan. Then it started becoming a little more sophisticated by many banks joining in together to do a syndicated deals. Then a stage came where banks started to participate in cross border deals.
African governments are looking to sharia-compliant financial markets to attract investment from the Middle East. The trend is just gathering strength, and experts expect more funds to flow into infrastructure and other major projects.
The latest wave of finance to reach African corporations and governments is coming from the Middle East, with an increasingly large sharia-compliant component.
Arab Spring and Milton Friedman: Is reducing MENA’s unemployment a social responsibility of Islamic Finance?
There is buzz about the prospects for Islamic finance in parts of the Middle East and North Africa region (MENA) impacted by the Arab Spring. News reports suggest that, as a consequence of change in public policy, the market share of Islamic banking in Egypt will grow to “35 per cent in five years from 5 per cent now.” Much attention in Islamic finance circles is also falling on the relatively smaller markets, including Oman and Morocco. Observers, including researchers from Credit Suisse, are also pointing to Islamic finance as a potential spur to economic growth in the Arab Spring countries.
The popularity of trading the world’s currencies has spread far and wide across the globe, garnering support from several cultures with differing religious beliefs. In order to accommodate all potential traders, the market has responded with customized offerings to appeal to the unique elements of each culture, whatever they may be. The prevalence of Islamic forex accounts is one example of these specialized offerings.
The trading of foreign exchange (forex) has grabbed the spotlight in Malaysia following a ruling by the National Fatwa Council that the practice is haram.
Bank Negara Malaysia (BNM), the central bank, has since issued a statement on the matter, saying that the buying and selling of foreign currency in Malaysia is only allowed with licensed commercial banks, Islamic banks, investment banks and international Islamic banks as provided for under the Exchange Control Act 1953; and with licensed money changers as provided for under the Money Business Act 2011.
Qatar plans to launch its first local currency-denominated bonds in a bid to develop a domestic bond market and move funding away from U.S. dollars, the Financial Times cited the finance minister as saying on Monday.
Qatar will announce the sale of the Islamic and conventional bonds to its domestic banks on Monday or Tuesday, Finance Minister Yousef Kamal told the newspaper.
Asia's relatively illiquid currencies restrict the region's Islamic finance growth potential as foreign investors have limited appetite for holding local currency assets, PricewaterhouseCoopers said on Tuesday.
Malaysia is regarded as a key Islamic finance centre and has the world's largest sukuk market, while Indonesia is seen as offering vast untapped opportunities in the sector.
Few took notice outside certain coteries of specialist bankers and lawyers, but the launch of a 42 page master documentation for derivatives that comply with Muslim religious principles could have a far-reaching impact on the Islamic finance industry.
The International Islamic Financial Market (IIFM), a Bahrain-based Islamic capital markets body, and the International Swaps and Derivatives Association (ISDA) have for the past four years been working on standardised documentation for derivative instruments that comply with sharia, or Islamic law.