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The World’s Leading Islamic Finance News Provider (All Cap) Bahrain’s Pakistani Property Company Focus: 1100 liquidity Islamic banks funds: The Shariah compliant 1050 999.78 fund — will it gain liquidity next big Abraham’s River set 1000 2.45% boost Islamic investment options thing for to unleash further 950 975.80 equities as country builds Islamic Islamic fi nance 900 on the infrastructure with investors?...8 growth in the US...12 W T F S S M T Powered by: IdealRatings® bourse?...6 Shariah fi nance...7 COVER STORY 29th June 2016 (Volume 13 Issue 26) Safe haven switch: Islamic funds ϐlip their ϐlows as global markets stumble Last week we looked at the potential a safe haven from the geopolitical 7.9% last week while even Wall Street impact of a Brexit on the UK’s instability in their own regions. So was not immune with a 3.6% fall for the Islamic fi nance economy, with most where else can this money go? S&P 500. Brexit does not just aff ect the participants sanguine about the UK — the ripple eff ect is very obviously prospect. Yet in the wake of a surprise Global ripples global. win for the Leave campaign, global The UK and Europe have certainly lost markets have been plunged into their luster for international investors. Islamic impact unexpected turmoil: with uncertainty Sterling is at its lowest level in three So what does this mean for the Islamic sending the UK economy into freefall. decades, the FTSE 100 fell by almost 9% fi nance industry? In terms of domestic What does this mean for Islamic the day after the referendum result and infl uence, the initial reaction is positive. investors — and which regions will Moody’s has already downgraded the In Malaysia, the response has been benefi t from the current volatility? UK’s credit outlook to negative. And largely restricted to optimism around LAUREN MCAUGHTRY learns that it’s not just the UK suff ering. According a strengthening ringgit, while in the as a safe haven, the US is suddenly to S&P, global equity markets lost over Middle East leaders have been quick to looking a lot more appealing… US$2 trillion on the 24th June — the distance themselves. “Due to the limited largest daily loss on record, beating connection between the UAE fi nancial This article is not going to be about the Lehman Brothers’s bankruptcy in system and that of the UK, the channels Brexit. We covered that issue (we hope) 2008 and the Black Monday crash of through which fi nancial institutions in fairly comprehensively last week, and 1987. “We expect considerable foreign the UAE could be aff ected by the state let’s face it — while the UK is a vital exchange volatility, a slowdown in of uncertainty over relations between piece on the global chessboard, it is not inbound foreign direct investment [and] the UK and the EU are limited,” said yet one of the top players in the Islamic a weakening of real estate markets,” the Central Bank of the UAE. Over fi nance game. So why do we keep said the rating agency in its latest note in Saudi Arabia Ahmed al-Kholifey, banging on about its impact on on the 27th June, followed by a shock the governor of the Saudi Arabian Islamic fi nance? Simply put, downgrade of the UK’s ‘AAA’ Monetary Authority, confi rmed that the because billions of Shariah credit rating. Kingdom had, in advance of the vote, compliant dollars are already revised its investment policy invested into the UK and Continental Europe has also regarding assets denominated in the Europe, and these latest experienced extreme turbulence euro and sterling. “It is early to assess events look set to disrupt — both Milan and Madrid the impact of the UK exit from the EU... an unprecedented period saw their biggest stock market but we expect the impact on the banking of economic strength that declines ever at over 12% each, sector to be minimal due to its limited has seen funds pour into the Germany’s DAX was down exposure to those two currencies,” he region from Middle Eastern 6.7% and France’s CAC fell 7.9%. said. and Asian investors seeking Globally, the Nikkei also dropped continued on page 3 Opening doors to PARTNERPARTNER WITHWITH USUS new opportunities Contact for more information: François-Xavier Chenhalls-Walker Email: [email protected] IFN RAPIDS Volume 13 Issue 26 year term limit decree for DEALS bank CEOs RATINGS IFN Rapids ................................................... ..2 Indonesia to raise IDR4 Tunisia aims for more Banque Saudi Fransi IFN Reports: trillion (US$301.2 million) sustainable growth, but ratings affi rmed at ‘A+’ via sovereign Sukuk • Bahrain’s liquidity fund — will it boost Islamic reforms will be key, says United Gulf Bank’s ratings auction Moody’s equities on the bourse? • Pakistani Islamic banks revised from stable to RCE Capital establishes Kenyan Islamic fi nancial negative gain liquidity investment options as country builds Sukuk Murabahah program institutions join hands to set RAM assesses rating impact infrastructure with Shariah fi nance • Property of up to RM900 million up Shariah fi nance lobby of NBAD-FGB merger funds: The next big thing for Islamic investors? (US$222.86 million) group Fitch affi rms IDB’s ‘AAA’ State-backed Iranian • Islamic fi nance retail space sees wave of new Allied Bank’s Islamic unit rating with a stable outlook mining company to issue interest on the back of improving fi nancial literacy and International Islamic IRR4 trillion (US$132.63 University Islamabad sign RAM reaffi rms ‘AA1/Stable/ • World nations turn to Islamic arbitration services million)-worth of Sukuk MoU to promote Islamic P1’ ratings on Sabah Credit as Shariah fi nance goes international • DIB’s Musharakah for mining fi nance and banking Corporation’s outstanding development knowledge Sukuk oversubscribed rights issue a boost to its expansion DP World to distribute Neelum Jhelum Dubai Islamic Bank’s plans within the UAE • US commercial real estate th Sukuk profi t on 5 July Hydropower Company rights issue credit positive, market continues to capture Shariah investment for US$1.5 billion trust to issue PKR100 billion says Moody’s certifi cates due 2017 despite slowdown • Sovereign Sukuk: A subdued (US$947.02 million) 10- Moody’s changes outlook year Sukuk; inks fi nancing week • Company Focus: Shariah compliant Sarawak Hidro to issue on UK’s sovereign ratings to RM5.5 billion (US$1.34 agreement with local banks negative from stable Abraham’s River set to unleash further Islamic billion) Sukuk facility; led by National Bank of AEON Credit Service’s fi nance growth in the US ................................. 7 expected in July Pakistan Islamic commercial paper th Sarawak Power Generation Faysal Bank opens 76 program maintains ‘P1’ Islamic banking branch IFN Analysis: makes Sukuk payment rating Sudan: Finding opportunities............................. 13 Pakistani Islamic banking Securities and Exchange Adira Dinamika’s IDR500 industry invests PKR155 Commission proposes billion (US$37.05 million) Private equity and venture capital in Islamic billion (US$1.45 billion) in amendment to Modaraba Sukuk Mudarabah rated fi nance ........................................................ 14 government securities in rules including making ‘idAAA(sy)’ appointment of Shariah Case Study: Turkey’s US$1 billion Sukuk: An fi rst quarter of 2016 advisors mandatory Capital Intelligence affi rms exciting comeback .......................................... 15 Hijrah Pertama to make Saudi Arabia’s ‘AA-’ and periodic distribution for Islamic banking assets ‘A1+’ ratings Column: Class B Sukuk capture 11.4% market share Thinking big .............................................. 16 of overall Pakistani banking Chellam Plantations industry in the fi rst quarter MOVES Country Correspondents: (Sabah) issues fi rst tranche Dr Jamil El Jaroudi to step Iran; UAE .................................................. 17 of RM300 million (US$73.2 Indonesia weighs sett ing up down as CEO of Bank million) Danajamin- off shore fi nancial center Nizwa; Khalid Al Kayed guaranteed Sukuk appointed as acting CEO Special Report: Murabahah RHB Banking Group Islamic banking and fi nance opens its doors in Proposed novation for ASSET to build on the potential Suriname to economic empowerment for Latin Konsortium ProHAWK’s of Singapore with key Sukuk Murabahah America and the Caribbean ............................ 19 MANAGEMENT leadership appointments Saratoga Investama Sedaya Sector Feature: NBAD Sukuk Income Fund Prime Minister Najib Razak studying possibility of distributes semi-annual reshuffl es cabinet; appoints The phenomenon of Shariah compliant funds ....20 issuing Sukuk 2.57% dividend new fi nance minister Islamic Finance news ................................... 22 UBL Funds launches Al- among others Deal Tracker .................................................29 NEWS Ameen Islamic Active Maldivian government REDmoney Shariah Indexes ...................... 30 Banque Misr secures Allocation Plan-V names Ahmed Munawwar Eurekahedge Funds Tables ........................32 US$105 million Murabahah as minister of fi nance and fi nancing from UAE banks TAKAFUL treasury Dealogic League Tables ..............................34 to boost foreign currency National Bank of Fujairah REDmoney Events ...................................... 38 resources Amana Takaful Life announces IPO worth appoints new board Subscription Contact................................... 38 Egyptian court voids nine- LKR75 million (US$502,816) member Disclaimer: IFN invites leading practitioners and academics to contribute short reports each week. Whilst we have used our best endeavors and eff orts to ensure the accuracy of the contents we do not hold out or represent that the respective opinions are accurate and therefore shall not be held responsible for any inaccuracies. Contents and copyright remain with REDmoney. © 2 29th June 2016 COVER STORY Safe haven switch: Islamic funds fl ip their fl ows as global markets stumble Continued from page 1 Uncle Sam Gold standard For Islamic investors, the In fact, this process has already While the future looks bright for consequences are less clear started.