Saudi’s Al Rajhi starts $300 mln Islamic property fund
Saudi Arabia’s Al Rajhi Group, a petrochemical-to-property conglomerate, is starting a shariah compliant $300-million Singapore-based fund that will invest in Asian property.
The fund, a joint venture with a Singaporean investor Yusof Wahid, will start with an initial investment of $100 million, the family-owned Al Rajhi Group said in a statement.
Categories: Islamic Investments · Saudi Arabia · Singapore
Kuwait Finance House Singapore opens for business
Kuwait Finance House (Malaysia) Berhad (KFHMB) is pleased to announce the opening of its first subsidiary outside of Malaysia. HE Dr Yaakoob Ibrahim, Minister for the Environment, Water Resources and Muslim Affairs of Singapore graced the event and officiated the Singapore office.
Singapore to develop Islamic bonds denominated in local currency
The Monetary Authority of Singapore (MAS) said it will develop a facility to issue Singapore dollar-denominated, sovereign-rated ’sukuks’, or Islamic bonds, to aid financial institutions conducting Shariah-compliant activities in Singapore.
Sukuks will be issued according to the needs of financial institutions in Singapore with Islamic finance operations, and will be priced against Singapore government securities, Heng Swee Keat, managing director at MAS told an Islamic Finance summit in Jordan late Tuesday.
‘This will provide a transparent price discovery mechanism for this new instrument. As the (Singapore dollar) sukuk market grows and deepens in time, it can then develop its own pricing benchmarks,’ Heng said in a statement released in Singapore.
The MAS said it will give further details about the facility in due time.
Categories: Innovations · Singapore · Sukuk
Interest in Islamic finance grows as conventional banking falters
Vince Cook, chief executive of Singapore-based Islamic Bank of Asia claims that interest in Islamic banking is progressively crossing over from the conventional market, as investors look for a ‘third way’ in light of the subprime crisis.
Cook’s claims come on the back of Islamic Bank of Asia’s (IB Asia) Shari’ah board concluding research on a steadily-growing stream of investors from both Islamic and non-Islamic investors.
Shaikh Nizam Yaqouby and Dr. Mohammed Daud Bakar, both members of IB Asia’s Shari’ah board, said that while changes in the global investment climate are driving demand for Islamic banking, it is the development of innovative Shari’ah compliant products that will help grow the industry.
“Shari’ah scholars have been leading the way in innovation. Investors now demand more than just debt finance, or lending and borrowing, in their products. They want to participate in the assets and this creates real economic value,” said Yaqouby.
Cook argued, “More investors, whether directly or indirectly affected by the subprime crisis, are being drawn to investment vehicles which are underpinned by an inherent immunity from risk.”
He also explained that financial centres such as Singapore were discovering the growing importance of Islamic banking and developing their financial services industry to take advantage of the growing interest in Islamic finance from non-Muslim sources.
In current market conditions, he continued, international institutional investors were looking for investments that shielded them from the worst ravages of the financial crisis. Given that by its nature, Islamic investment forbids exposure to debt-based financial institutions, these funds were stating to look attractive as a hedge against subprime afflicted intuitions.
Cook also said that Asia was having a greater impact on the development of global Islamic finance than it was being given credit for. “When you listen to a discussion about the growth of Islamic finance, all the headline-grabbing stuff is about Middle Eastern petrodollars.”
“In fact, the real engine for growth is Asia, with its huge Muslim populations. These nations, such as Indonesia, have never had the option of banking Islamically, and there is a growing grassroots demand for this kind of service.
“It is the banks in South East Asia which are servicing this demand, and it is these banks that are being the most innovative and dynamic in the global Islamic banking sector, and the future growth in Islamic banking will come from this region,” he concluded.
Categories: Dr. Daud Bakar · Growth · Singapore
Tagged: Islamic Banking, Islamic finance, Sukuk
Asset managers eyeing fast-growing Islamic banking
Amid the push to strengthen Singapore as a financial hub, private banking saw strong growth here in 2007. That was partly due to the rising number of high net worth individuals in the region.
The nouveau riche aside, asset managers are also eyeing the fast-growing
multi-billion-dollar Islamic banking sector.The “US sub-prime credit crisis” may well be the most commonly bandied-about term in the markets in 2007. But other key trends in Singapore – in mergers and acquisitions (M&A), private banking and Islamic banking – have not gone unnoticed.
PricewaterhouseCoopers Singapore’s Asia financial services leader, Dominic Nixon, said: “2007 is going to be remembered primarily for the credit crunch and the liquidity crisis that followed that, along with the volatility that took place within all the markets, particularly in Asia.
“2007 will also be remembered as M&A activity continuing in financial services, growth of Asian banks and the development of the wealth management sector as the whole population in Asia and Singapore gets more sophisticated.”
Analysts said emerging markets in Asia have continued to attract foreign funds and thrived, despite tighter credit.
Mr Nixon said: “The liquidity and credit crunch will affect some short-term issues, but there are still a lot of emerging economies here – Vietnam, Taiwan, India, China.
“There will be consolidation taking place in those countries. There will be people who want to invest in those countries and they want to do it inorganically, buy assets in those countries as well. M&A activity won’t fall off, because Asia is exciting and people want to be a part of that.”
Private bankers have flocked to Asia, including Singapore, to tap into the rising numbers of the new rich.
Standard Chartered Private Bank’s global head for sales and business development, Rajesh Malkini, said: “The rate of growth in this part of the world is higher, at a little over 9 percent as compared to other parts of world…
“Singapore and India have added significant numbers of high net worth individuals over the last couple of years, more so in 2007. It made a lot of sense for us to locate our private banking headquarters in Singapore… proximity to growth markets in Asia and Mideast.”
Industry players say Singapore’s stability and infrastructure has even attracted money intended for North Asia.
More funds may be headed this way as the city-state eyes a bigger role in the fast-growing Islamic banking market, said to be worth at least US$500 billion.
Earlier this year, DBS joined hands with Middle Eastern investors to set up Singapore’s very first Islamic bank.
Vince Cook, CEO of The Islamic Bank of Asia, said that with the combined reserves of the Gulf Cooperation Council, greater than that of China, the Islamic banking market can easily grow to one trillion dollars in the next few years.
“The combined free reserves of the GCC countries are actually greater than those in China. While everyone focuses on China as a huge prize, the Gulf is very interesting too. And with oil prices staying at these levels, we’ll see that continue for some time,” he said.
The Islamic Bank of Asia already plans to grow its presence in the Gulf.
Mr Cook said: “We’re still at a relatively early stage of growth of the industry. What’s happening is the players are more engaged in developing the market than fighting each other for market share.
“The first thing we have to do is to get a clear view of our geographical priorities, like where do we need to be to get close to our customers. The early parts of the new year will see us spending lots of time sorting out our first office overseas in Bahrain.”
And even before that is open, the Singapore bank already has plans for a third office elsewhere.
As the financial industry in Singapore gears up for an aggressive 2008, players are pausing to give the government due credit for minimizing operational risks.
PwC Singapore’s Mr Nixon said: “Singapore needs to continue doing what it has already been doing – developing a robust infrastructure with a cost base to attract players to the region to operate their hubs. That’s always been Singapore’s key strength. Islamic banking is a good example of creating the right environment for people to operate in.”
Assets managed by fund managers based in Singapore grew by 24 percent in 2006 to reach S$891 billion.
Categories: Around the world · Islamic Mutual Funds · Singapore
