» Promising Future for Islamic Finance

Promising Future for Islamic Finance in Tunisia
Ali ALaarayed, the Tunisian Prime Minister, visited Saudi Arabia earlier this week where he met with the President of the Islamic Development Bank as Tunisia has been able to secure $1.2 billion in funding through it.
Among the trials of the government and the customers to adapt with the bad financial situations, there is a growing trend to support Sharia’a compliant financial products and institutions in Tunisia. The Tunisian government has even discussed plans to issue Islamic sukuk, a kind of Islamic bond, to collect $700 million approximately.
In June, Thomson Reuters released a report about the Islamic finance industry in the country entitled”Cautiously Optimistic Tunisia.” The report’s findings are based on a survey about the perspective and the use of financial retail services with a particular focus on Islamic finance on a national level. The report highlights “a strong demand for Islamic finance in the country with a potential up to 40 percent of total financial assets in the next five years.” This number was repeated by the Tunisian Central Bank Governor Al Chedly Al Ayari in a press conference.

Islamic Banking Association launches an index of the Sharia’a -compliant shares on the Egyptian Exchange:
Islamic banking experts have called the Central Bank of Egypt during the fourth annual conference of the Egyptian Islamic Finance Association to amend its policies regarding Islamic banking services to be more compliant with the Islamic banks. During the conference, the association launched its index of shares compatible with Islamic rulings measuring the performance of the traded shares on the Egyptian Exchange with their compatibility with Sharia standards.
Abd ul-Aziz Hijazi – the Ex-Egyptian Prime Minister- noted the importance of the Islamic financial instruments whether through banks or Islamic bonds. He called the central bank to amend its policies with regards to Islamic banking to make them more compatible with Islamic banks themselves.
Kothar Al-Abja, a Professor of accounting and Vice Chairman of Beni Suef University, stressed the need to make the role of the Islamic endowments effective.  It is estimated by “hundreds of billions in funds” squandered due to its bad management.

Malaysia’s new regulation covers both Islamic and conventional financial services:
Malaysia has issued a unified act and a business plan for the Islamic and conventional financial services (FS). The Malaysian Financial Services Act 2013 (FSA) and Islamic Financial Services Act 2013 (IFSA) came into effect earlier this week after being approved by Parliament since 7 months.
The Malaysian Central Bank stated that “The new Act will place Malaysia's financial sector including the banking system, the insurance/takaful sector, the financial markets, and the payment systems, and etc on the way towards a sound, responsible, and progressive financial system.”
Clarity and transparency in the implementation and administration are some of the characteristics of the code due to the clarity of the legal concepts and the credibility of the Malaysian Central Bank in achieving its most important goal towards financial stability.

London aims to win bigger slice of thriving Islamic finance market
London is pushing for an increased share of the global Islamic finance market as the sector expands to a forecast $1.6tr in assets over the next three years. The prize for London is to take a slice of these “sharia-compliant” assets, which have grown by almost 50 per cent in two years, from $826bn in 2010 to $1.2tr in 2012, according to TheCityUK, the finance sector lobby group. The figure is expected to rise to $1.6tr by 2015. The government in March launched an Islamic finance task force, led by Treasury minister Greg Clark and Baroness Sayeeda Warsi, a Foreign Office minister, and Mr Johnson visited the Gulf in April in an investment drive.

Saudi sukuk market gains momentum in 2nd quarter:
Depressed initial public offering (IPO) activity in the Gulf Cooperation Council (GCC) continued into the second quarter (Q2) of 2013 with three new listings raising a total of only $ 48 million. This compared to the two IPOs in Q1, 2013 raising an aggregate of $ 337 million, representing an 86 percent decrease in total value raised.
The average offering value dropped 94 percent this quarter compared to the same quarter last year where four IPOs were witnessed raising a total of $ 1.1 billion. The total value raised in Q2, 2012 was the result of a stronger performance in the Saudi market, where out of the total four IPOs, three were Saudi-based. While the value of offerings significantly dropped this quarter, the number of offerings remained relatively stable at 3 IPOs.
The most prominent share offering during the quarter was that of the Abu Dhabi-based Al Noor Hospitals Group, which listed 33 percent of its equity on the premium segment of the London Stock Exchange (LSE), raising total proceeds of $ 342 million. Al Noor is the second health care service provider in Abu Dhabi to have opted for an international listing after NMC Health Plc, which raised $ 187 million in an IPO on the LSE in 2012.  After a quiet first quarter, the Saudi sukuk market was seen to be one of the most active in Q2, 2013 with sizable sukuk issuances on both the corporate and sovereign front. These included sukuk issued by Islamic Development Bank raising total proceeds of $ 1 billion, Saudi Electricity Company, and Sadara Chemicals Company each raising $ 2 billion.

Templeton favors Malaysian corporate sukuk:
KUALA LUMPUR: Franklin Templeton Investments and ECM Libra Financial Group Bhd said they favour Malaysian corporate sukuk, which has outperformed, as the Federal Reserve considers ending stimulus. The yield on sovereign wealth fund Khazanah Nasional Bhd’s 2022 ringgit-denominated sukuk has climbed 25 basis points since May 22, when Chairman Ben S Bernanke first signaled a possible halt to the Fed’s debt purchases.

Central Bank of Bahrain: CBB Sukuk Al-Ijara oversubscribed:
Manama, Bahrain -18 June 2013 - The Central Bank of Bahrain (CBB) announces that the monthly issue of the short-term Islamic leasing bonds, Sukuk Al-Ijara, has been subscribed by 135%.
The expected return on the issue, which begins on 20 June 2013 and matures on 19 December 2013, is 0.80% compared to 0.85% for the previous issue on 16th May 2013.
The Sukuk Al-Ijara are issued by the CBB on behalf of the Government of the Kingdom of Bahrain.

Kuwait Finance House to Start Dollar Sukuk Fund as Yields Climb:
Kuwait Finance House KSC will start a $100 million sukuk fund as a slump in global bond markets offers a chance to invest at higher yields, the chief executive of its Malaysian asset-management unit said. The fund will buy investment-grade sovereign and corporate dollar notes that comply with Islam’s ban on interest from the Middle East. The fund will be managed by KFH Asset Management and KFH’s unit based in Labuan, Malaysia’s offshore financial center.