U.S. Connecticut-based Shariah Capital predicts that more Shariah-compliant hedge funds will likely be launched, specializing in healthcare, telecommunications, and technology stocks.

According to Reuters, thus far, Islamic hedge funds have had trouble getting off the ground, due to the prohibitions against speculative financial techniques and transactions that are commonplace in hedge funds, derivatives, and other sophisticated financial investment tools. But now, the $1 trillion Islamic finance industry is broadening its reach into areas that were strictly off limits. In recent years, there have been increasing developments in, for example, issuance of credit cards that are Islamic-compliant, as well as hedge funds and derivatives trading.

Earlier this month, IIFM, an Islamic finance industry body, with the backing of a derivatives association and banks such as Credit Agricole (CAGR.PA) and Standard Chartered (STAN.L), launched a template over-the-counter Islamic derivative contract. The move was intended to address concerns by industry practitioners and scholars about the extent to which derivatives trading comports with traditional Shariah principles.

There is no doubt that there will be more attention paid to Shariah-compliant financial products as the industry continues to grow. For more information on the challenges posed to financial instruments and common diversification techniques or products by Islamic principles, please contact the attorneys at Ice Miller at info@islamic-finance-blog.com.

For the original Reuters story, please click here: http://www.reuters.com/article/idUKSGE61308Z20100311

HSBC Amanah has been named Best International Islamic Bank by Euromoney magazine, in its Islamic Finance Awards 2010. AMEinfo.com reports that the Euromoney awards are widely considered to be the most high profile accolades in the Islamic Finance calendar and annually recognize outstanding performance, quality, service, and innovation in the sector.

In addition to being awarded the title of Best International Islamic Bank, Euromoney also named HSBC Amanah Best Sukuk House for the leading role it continues to play in Islamic debt capital markets.

According to AMEinfo.com, During 2009 HSBC Amanah grew its operations in Saudi Arabia, through SABB, UAE, and Malaysia, while expanding in the key growth territories of Indonesia, Qatar and Bahrain. The business launched HSBC Amanah Premier, the world’s first international Islamic premium banking service and led activity in the Islamic debt capital markets, structuring and lead managing many of the landmark transactions in 2009.

For the full story, click here: http://www.ameinfo.com/223934.html

Business 24|7 reports that Connecticut-based Shariah Capital and Dubai Multi- Commodities Centre (DMCC) plan to boost assets under management in their specialized commodity funds to the “multibillion” dollar level in three years from almost $260 million now, senior officials said.

“Our plan is to make this a multibillion project within three years. We’re now ready to raise funds,” Eric Meyer, Chairman and Chief Executive of Shariah Capital, told Zawya Dow Jones in an interview.

DMCC, part of Dubai World, in a joint venture with Shariah Capital known as Dubai Shariah Asset Management (DSAM), launched a basket of four commodity-focused funds in 2008 and seeded the funds with $50 million each. DSAM develops and manages Shariah-compliant investment funds focused on commodities.

The DSAM Kauthar Commodity Fund, an equally-weighted fund of funds comprised of the four single-strategy commodity-focused funds, had total assets under management of $259 million as of January 31, 2010, DMCC’s Chairman Ahmed bin Sulayem said.

The DSAM Kauthar Commodity fund of funds was up 41 percent in 2009, with all single-strategy funds also in positive territory in 2009.

The Sharia Capital-DMCC joint venture is now in the process of partnering with banks and insurance companies in the Middle East, Europe and Malaysia to sell the funds, Meyer said, adding that the target is to secure 25 percent of the assets from Saudi Arabia.

Full story from Business 24|7 here: http://www.opalesque.com/IslamicFinance_Briefing/?p=6146

In the next few months, Saudi Arabia will move forward in pushing the frontiers of Shariah complaint lending/financing practices by issuing its first mortgage law. Bloomberg reports that the legislation will boost the real-estate industry and allow banks to diversify their balance sheets.

Apparently, Saudi Arabia’s property market is suffering from a shortage of housing units, shielding the kingdom from corrections in the real estate markets of other Gulf Arab states. Real estate prices in Dubai plummeted around 50 percent from their peak, according to Deutsche Bank estimates.

The Sharia-compliant legislation which has been discussed for the past two years will consist of five parts. It will define the terms of mortgages, how they are designed, how they are granted, how companies are licensed and how procedures will be enforced.

The legislation is on the way to the council of ministers before going to the Shura Council, the country’s consultative assembly, for final approval.

Full story, here: http://www.bloomberg.com/apps/news?pid=20601104&sid=afy6Vy3FViNg

Canada’s National Housing Agency has issued a report that Shariah-compliant mortgages would pose no legal problems, nor would other Islamic financial products. The 88-page study was done at the direction of Canada Mortgage and Housing Corp., by the assistance of Canadian law firm Gowling, Lafleur Henderson LLP.

“Islamic financial products should not present any particular difficulties under Canadian accounting standards,” says the study by the Canadian law firm Gowling, Lafleur Henderson LLP, released in late January.

Apparently, no Candadian chartered banks currently offer Islamic mortgages. The Canada Mortgage and Housing Corp. report says there would be no legal obstacles if private entities offered the financial services to Canada’s Muslim community, believed to number at least 700,000.

The Islamic mortgages would follow typically “diminishing musharakah” or similar installment-purchase models employed by Islamic financial instruments.

For the full story, click here: http://blog.beliefnet.com/news/2010/02/canadas-housing-agency-approve.php

Just when many of the world’s financial systems have been working to weather the capital market turmoil and its spread to economies around the globe, Islamic finance growth has stayed strong and will likely be brisk during the next year, said Standard & Poor’s Ratings Services in a report titled “Islamic Finance Is Likely To Advance In 2010 On Firm Growth And Widening Geographic Reach,” published today on RatingsDirect.  

“We believe Islamic finance has become a recognized and a specific segment of finance on its own with still-bright growth prospects. We think Islamic finance is set to make further inroads in developed Western markets while Southeast Asian countries will likely fuel the Islamic finance advance in Asia in 2010,” said Standard & Poor’s credit analyst Mohamed Damak.

“At the same time, though, we believe there are a number of important questions for which the answers are not necessarily yet clear but that may play a part in shaping the sector’s future growth. Specifically in non-Muslim countries, and especially in Europe, we consider they include the size of demand for Sharia-compliant products, regulatory and tax environments, the support of the political and financial communities, sovereign sukuk issuance, and the possibility of a common strategy for extending Islamic finance across EU countries.”

Assets of the top 500 Islamic banks expanded 28.6% to total $822 billion in 2009, compared with $639 billion in 2008, according to S&P.    For the press release click here: http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245205629399 

The international financial services information company Thomson Reuters launched on Tuesday, January 19, an Islamic banking-tailored risk management system.

“Kondor+ Suite for Islamic Banking is a modern software solution that can be customised to a client’s needs to meet the practices and regulations that vary by region,” Andrew White, Global Head of Risk Management, Thomson Reuters, said in a statement.

The system provides full front-to-back and cross-asset coverage of Islamic banks as well as Islamic windows in conventional banks.

It includes Murabaha, sale on profit, and Wakala, fiduciary agreement between two parties.

“This launch demonstrates Thomson Reuters commitment to providing financial institutions with the specialist tools which they require to return benefits for their clients.”

Last month, Thomson Reuters announced plans to launch a news portal covering information about the Islamic financial industry in early 2010.

The foundation, which has been active in the Middle East, Africa and South East Asia since 1865, has strong Islamic finance assets covering leading content, news, analytics and trading capabilities.

Reuters believes this would help bring about a sharp rise in the Islamic finance market, already one of the fastest growing sectors in the global financial industry.

NCB Capital, the invesment banking arm of National Commercial Bank, Saudi Arabia’s largest bank, believes that the Middle East is now set to become a new global growth engine reflecting an ongoing structural shift in the global balance of economic and financial power. In the January edition of the Gulf Cooperation Council monthly economic bulletin, NCB Capital chief economist Jarmo Kotilaine points to a number of facts that back that assertion:

• Attractive macroeconomic fundamentals will likely ensure robust economic growth rates in the years ahead.
• Emerging markets have generally experienced a much milder cyclical correction in this downturn. Moreover, ample surpluses accumulated thanks to cautious government policies during the boom years have been effectively mobilized to smoothe over the cycle without creating major new borrowing needs.
• Driven by oil, demographics and diversification, the GCC is set to become a $2 trillion economy in the next decade, with surpluses largely being utilized toward the development of the non-oil sector. Also, with a young population base, the GCC is well positioned to reap the demographic dividend.

Full Story Here: https://www.arabfinance.com/News/newsdetails.aspx?Id=159487