gif
Editorial Letter
The Islamic finance and banking industry is grow- ing and preceding expectations attracting inves- tors from across a global market. The breadth of new products and services delivered from the Is- lamic finance sector has given scope to investors worldwide wishing to tap into the lucrative sector. However, inevitably as with any financial sector there will challenges that need to be overcome in order to spur the industry forward.
This is the time that Islamic finance in-
vestment options can experience a signifi- cant growth. 2012 is a landmark year for the global Islamic finance industry. The sector has seen a real growth spurt recently, due to an unprecedented rate of development in new, specialised Islamic financial indexes, in ad- dition to further general growth opportunities for investments around the world
A year ago, we knew that 2011 would grind along on the relatively flat tail of a square-root sign-shaped recovery. We expected there to be a continued tug-of-war between headline grabbing downside risks and the upside news of corporate earnings. The events that played out consistently confirmed our expectations. In 2012, we see this environment continuing. Volatility, due in many cases to sensational risk stories, will likely remain elevated through most of the year. Corporate earnings, particularly by U.S. companies, are set to slow after two years of outsized gains. Modest profit growth will likely balance the scales on the positive side. The sum of these two factors should result in positive, albeit modest, global share mar- ket returns in 2012 which are likely to spur profit- ability in the Islamic financial sector
While this is the summary outlook globally, spe- cific stories will certainly vary by region. Europe will continue to dominate negative financial head- lines—and rightly so. A European recession seems inevitable but Europe’s leaders can still act to pre- vent financial collapse and a deeper downturn.
It is therefore imperative for investors to recog- nise the importance of an efficient portfolio which caters to effectively highlight every detail about their portfolio management. Every basis point earned will be hard fought. We believe regional diversification will need to be firmly in place, as the economic centre of gravity will continue to shift eastward because of China and emerging markets. As traditional investments remain flat, alternatives will matter more than ever.
This is the time that Islamic finance investment options can experience a significant growth. 2012 is a landmark year for the global Islamic fi- nance industry. The sector has seen a real growth spurt recently, due to an unprecedented rate of development in new, specialised Islamic financial
indexes, in addition to further general growth op- portunities for investments around the world.
The most recent investment opportunity is the brain-child of Crescent Wealth and Thomson Reu- ters, who collaborated to create a specialised in- dex which will give investors the means to build a fully–fledged, Shariah-compliant equities port- folio in Australia.
In 2012 and later on there will be arising demand for safe assets, but fewer of them will be available, increasing the price for safety in global markets. In principle, investors evaluate all assets based on their intrinsic characteristics. In the absence of market distortions, asset prices tend to reflect their underlying features, including safety. How- ever, factors external to asset markets including the required use of specific assets in prudential regulations, collateral practices, and central bank operations—may preclude markets from pricing assets efficiently, distorting the price of safety.
Before the onset of the global financial crisis, regulations, macroeconomic policies, and mar- ket practices had encouraged the under pricing of safety. The global financial crisis was preceded by considerable overrating, and hence mispricing, of safety. In retrospect, high credit ratings were applied too often, both for private and sovereign issuers, and they did not sufficiently differentiate across assets with different underlying qualities. The demand for safe assets is subject to consid- erable upward pressures and recent report of IMF shows that the supply of safe assets is likely not to satisfy such demands.
This is the time for Islamic assets to expose them- selves to more potential investors and highlight the various benefits it can bring to the competive financial industry. In this in depth issue of GIF we will review the investment opportunities around the world in the growing Islamic finance Sector.
Farhad Reyazat
PhD in Risk Management Editor in Chief
To write the letter to the editor, send an email to
editor@globalislamicfinancemagazine.com. 8 Global Islamic Finance May 2012
„
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88