The Future of Islamic Capital Markets

Publication Date	January 2008
Publisher	IFR Market Intelligence
Product Type	Report
Pages	113
ISBN Number	not applicable
Product Code	IFR00001

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Summary

By Mohammed Kada

Islamic Finance continues to surge ahead with what looks like inexorable growth, breaking new records for issuance every year. While it is still a small area relative to capital markets as a whole, few doubt its vast potential, fuelled as it is by unprecedented liquidity in the oil rich Islamic regions of the Middle East and Asia and by growing interest from both Islamic and non-Islamic investors across the world. Many of the major international investment banks now have Islamic finance platforms.

The Future of Islamic Capital Markets is a definitive report on the phenomenon on this burgeoning market written by one of the world's foremost authorirties on the subject, giving excellent insight into:

Developments in the Islamic capital markets to date and their future direction
The nature of Islamic finance instruments and their likely structural developments
Drivers of future market growth
Key players in the Islamic capital markets
How best to succeed in this market.

Written by the former advisor to the President of the Islamic Development Bank and Chairman of the IDB's Strategic Planning and Organization Task Force, and packed with highly informed, practical advice, The Future of Islamic Capital Markets should be essential reading for all issuers, investors and policy makers with an interest in this fascinating market.

Content

01 Executive Summary
- The Purpose Of This Report
- Market Size And Growth
- Islamic Capital Market (Icm)
- Future Outlook
- Opportunities And Strategies
- Conclusion
- The Structure Of This Report
Chapter
- 07 Introduction
- The Purpose Of This Report
- Islamic Finance Ethics And Principles
- Basics Of Islamic Economic And Financial Systems
- Islamic Finance Instruments
- Quard-Hasan (Interest-Free Loan)
- Equity
- Ijara (Leasing)
- Legal And Economic Features Of Ijara Contract And Asset Ijara Bonds
- Instalment Sales
- Istisnaa (Commissioned Manufacture)
- Mudaraba (Profit And Loss Sharing)
- Murabaha (Cost-Plus Financing Trade-Based Mode)
- Musharaka (Partnership Financing)
- Bai-Salam (Advance Purchase)
- Sukuk
- Takaful (Sharia-Compliant Insurance Mutual Insurance)
- The Size Of The Islamic Finance Market
- Differences In The Gcc And Malaysian Approaches
- The Malaysian Regulatory And Supervisory Framework
Chapter
- 17 Islamic Finance Drivers And Enablers
- Introduction
- Economic Growth
- Economic Outlook In The Gcc
- Gcc Economic Development
- Future Challenges
- Economic Outlook In Malaysia
- Economic Outlook In The Member Countries Of The Idb
- Regional Liquidity
- New Emphasis On Investment Within The Region
- Financial Centres
- Bahrain
- Dubai
- Qatar
- Saudi Arabia
- Kuwait
- Malaysia
- Singapore
- London
- Islamic Finance Industry Architecture
- Islamic Finance Architecture: An Update
- Salient Features Of Islamic Finance
- International Islamic Fiqh Academy (Iifa)
- The Accounting And Auditing Organisation For Islamic Financial Institutions (Aaoifi)
- Islamic Financial Services Board (Ifsb)
- The International Islamic Financial Market (Iifm)
- Liquidity Management Centre (Lmc)
- International Islamic Rating Agency (Iira)
- The International Arbitration And Reconciliation Centre For Islamic Financial Institutions
- (Arcifi)
- General Council For Islamic Banks And Financial Institutions (Gcibfi)
- Research And Contribution Of World Class Institutes
- The Islamic Research And Training Institute (Irti)
- Harvard
- Other Universities And Research Centres
- Training
- Support And Media Services
- Conferences And Seminars
- Publications
- Online News
- Websites
- Technology
Chapter
- 37 The Main Icm Players
- Islamic Development Bank (Idb)
- Government Agencies
- Saudi Arabian Monetary Agency (Sama)
- Kuwait Investment Authority (Kia)
- Abu Dhabi Investment Authority (Adia)
- Global Investment Banks
- Hsbc
- Cimb
- Barclays Capital
- Deutsche Bank
- Jp Morgan
- Other Global Investment Banks
- Local And Regional Banks
- Riyad Bank
- Dubai Islamic Bank (Dib)
- National Bank Of Abu Dhabi (Nbad)
- Arab National Bank (Anb)
- Arab Banking Corporation (Abc)
- Al Rajhi Banking And Investment Corporation (Arabic)
- The National Commercial Bank (Ncb)
- Maybank (Malayan Banking Berhad)
- Kuwait Finance House K.S.C. (Kfh)
- Global Banking Corporation (Gbcorp)
- Bank Albilad
- Corporate Borrowers
- Nakheel Development
- Ports, Customs & Free Zone Corporation (Pcfc)
- Saudi Arabia Basic Industries Corporation (Sabic)
- Aabar Petroleum Investments (Aabar)
- The National Air Services (Nas)
- Qatar Gas Transportation Company (Nakilat)
- The Abu Dhabi National Energy Company (Taqa)
- The National Industries Group (Nig)
- Aldar Properties
- Dar Al-Arkan Real Estate Development Company (Dar Al-Arkan)
- Savola Group
- Cherating Capital
- Rating Agencies
- Role Of Rating Agencies In Market Development
- The Islamic International Rating Agency (Iira)
- Standard & Poors
- Moodys
- Fitch
- Rating Agency Malaysia Berhad (Ram)
- Malaysian Rating Corporation Berhad (Marc)
- The Pakistan Credit Rating Agency (Pacra)
- Jcr-Vis Credit Rating Co. Ltd. (Jcr-Vis)
- Indices
- Citigroup And Dow Jones
- S&P Pan-Asia Sharia Index
- Hsbc And The Dubai International Financial Exchange (Hsbc/Difx)
Chapter
- 59 Outlook For Icm
- Economic Forecasts
- Icm Size And Growth
- Financial Centres
- New Islamic Banks Established Or Announced During 2007
- Sukuk
- Ijara And Other Sukuk Types
- Structure Of Existing Ijara Sukuk
- Other Forms Of Sukuk
- Sharia-Compliant Funds
- Project Finance
- Key Factors In Maaden/Sabic Breakthrough
- Private Equity (Pe)
- Takaful
- Demand From Non-Muslims
- Opportunities In The Icm
- Current Markets (Gcc, Malaysia)
- Bahrain
- Kuwait
- Oman
- Qatar
- Saudi Arabia
- Uae
- Malaysia
- New Markets
- Algeria
- Indonesia
- Libya
- Pakistan
- Turkey
- Sectors And Market Segmentation
- Challenges For The Icm
- Sharia Compliance And Converging Sharia Requirements
- Regulatory Framework
- Standardisation
- Rating
- Short-Term Liquidity
- Liquidity Management In Islamic Finance
- Innovation
- Education And Training
- Secondary Market And Cross-Border Transactions
- New Islamic Finance Products And Instruments
- Sukuk
- Equity
- Project Finance
- Hedging
- Derivatives
- Sharia Compliance Risks
- Nature Of Risks
- Risk Management
Chapter
- 87 Icm Strategies
- Recent Experience In The Icm
- Islamic Finance Architecture
- Financial Centres
- Local/Regional Bank Strategies
- Global And Investment Bank Strategies
- Gaining Competitive Advantage
- Borrowers Strategies
- Takaful Insurance
- Mergers And Acquisitions
- Efficiency And Cost Control
Chapter
- 95 Conclusion
- Future Prospects
- Appendix
- 97 Gcc Countries
- Bahrain
- Kuwait
- Oman
- Qatar
- Saudi Arabia
- Uae
- Appendix
- 103 Malaysia
- Appendix
- 105 New Markets
- Algeria
- Indonesia
- Libya
- Pakistan
- Turkey
- Appendix
- 111 Useful Links
List Of Tables And Figures
- Table 1.1: Evolution Of The Islamic Financial System
- Table 2.1: Malaysia Economic And Financial Indicators, 200107
- Table 2.2: Banks And Insurance Companies Listed In The Qatar Financial Authoritypublic Register, Oct 2007
- Table 3.1: Idb Group Overview
- Table 3.2: Sovereign Wealth Funds Estimated Assets (Us$)
- Table 3.3: Kuwait Investment Authority
- Table 3.4: Abu Dhabi Investment Authority
- Table 3.5: Islamic Bonds Global Total, 2006, 2007
- Table 3.6: Islamic Bonds Hsbc, 2006, 2007
- Table 3.7: Islamic Bonds Cimb, 2006, 2007
- Table 3.8: Islamic Bonds Barclays Capital, 2006, 2007
- Table 3.9: Islamic Bonds Deutsche Bank, 2006, 2007
- Table 3.10: Islamic Bonds Jp Morgan, 2006, 2007
- Table 3.11: Islamic Bonds Riyad Bank, 2006, 2007
- Table 3.12: Islamic Bonds Dubai Islamic Bank, 2006, 2007
- Table 3.13: Islamic Bonds National Bank Of Abu Dhabi, 2006, 2007
- Table 3.14: Islamic Bonds Arab National Bank, 2006, 2007
- Table 3.15: Abc Subsidiaries
- Table 3.16: Islamic Bonds Abc, 2006, 2007
- Table 3.17: Standard & Poors Gcc Ratings
- Table 4.1: Total Sukuk Issued, 2001 2007 (Us$M)
- Table 4.2: Domestic Sukuk Issued, 2001 2007 (Us$M)
- Table 4.3: International Sukuk Issued, (2001 2007 (Us$M)
- Table 4.4: Available Capital Market Products
- Table 4.5: Types Of Capital Market Products
- Table 4.6: Risks Specific To Islamic Financial Services
- Table A1: Bahrain Selected Socioeconomic Statistics, 200208p
- Table A2: Kuwait Selected Socioeconomic Statistics, 200208p
- Table A3: Oman Selected Socioeconomic Statistics, 200208p
- Table A4: Qatar Selected Socioeconomic Statistics, 200208p
- Table A5: Saudi Arabia Selected Socioeconomic Statistics, 200208p
- Table A6: Uae Selected Socioeconomic Statistics, 200208p
- Table A7: Malaysia Selected Socioeconomic Statistics, 200208p
- Table A8: Algeria Selected Socioeconomic Statistics, 200208p
- Table A9: Indonesia Selected Socioeconomic Statistics, 200208p
- Table A10: Libya Selected Socioeconomic Statistics, 200208p
- Table A11: Pakistan Selected Socioeconomic Statistics, 200208p Pakistan
- Table A12: Turkey Selected Socioeconomic Statistics, 200208p
- Figure 2.1: Budget Surplus (+)/Deficit (-) As % Of Gdp, 200107f
- Figure 2.2: Foreign Reserves Minus Gold, 200107f (Us$Bn)
- Figure 2.3: Current Account Surplus/Deficit, 200107f (Us$Bn)
- Figure 2.4: Total Value Of Gcc Projects By Industry (Us$Bn)
- Figure 3.1: Market Share Of Top Five Sukuk Underwriters, Januarymid-November 2007 (%)
- Figure 4.1: Middle East Gross Official Reserves And Public Debt, 19982007 (Us$Bn, %)
- Figure 4.2: External Developments In Emerging Market And Developing Countries, 2000jun 2007
- Figure 4.3: Global Outlook, 19962008f (Real Gdp; % Change From A Year Ago)
- Figure 4.4: Current And Capital Account Flows In Middle East Oil Exporting Countries, 19902007 (% Of Gdp)
- Figure 4.5: Structure Of A Generic Ijara Sukuk
- Figure 4.6: Istisnaa-Based Ijara Sukuk (Example Of Darrat Sukuk)
- Figure 4.7: Total Sukuk Issued, 2001 2007 (Us$M)
- Figure 4.8: Domestic Sukuk Issued, 2001 2007 (Us$M)
- Figure 4.9: International Sukuk Issued, (2001 2007 (Us$M)
- Figure 4.10: Bahrain Total Value Of Active Projects By Industry, 2007,(Us$Bn)
- Figure 4.11: Kuwait Total Value Of Active Projects By Industry, 2007 (Us$Bn)
- Figure 4.12: Oman Total Value Of Active Projects By Industry, 2007 (Us$Bn)
- Figure 4.13: Qatar Total Value Of Active Projects By Industry, 2007 (Us$Bn)
- Figure 4.14: Saudi Arabia Total Value Of Active Projects By Industry, 2007 (Us$Bn)
- Figure 4.15: Uae Total Value Of Active Projects By Industry, 2007 (Us$Bn)