Credit crunch a golden opportunity

[Najm]

AsSalamOAlaikum WaRehmatuAllah Wabarkatuhu

The global credit crunch is a blessing in disguise for Islamic finance as international debt markets enter a new era.


(Sukuk.net Press) The global credit crunch is a blessing in disguise for Islamic finance as international debt markets enter a new era, according to industry observers.

"Now is a golden opportunity for Islamic finance to provide an alternative model which, by its very nature, binds both the real and financial economies - just what the world needs right now," Swati Taneja, conference director of the Islamic finance industry's leading global event, the twice-yearly International Islamic Finance Forum that next takes place in Istanbul from 13 -17 October 2008.

"There has never been a more interesting time for cautious investors burned in the conventional credit crunch to begin looking at what the Islamic markets have to offer," Taneja added. "For Islamic financial products to be compliant they avoid excessive gearing and speculation - precisely what regulators are looking for the world over in the new era we are entering."

The Istanbul forum provides the first major opportunity for Islamic finance practitioners from around the world to assess the impact of the turmoil that has gripped international markets in recent weeks.

"In today's globalised markets financial products of all types - Islamic or conventional - are affected," said Taneja. "But what is clear is that Islamic finance practitioners are identifying new markets as a result and are likely to have renewed confidence in the inherent sustainability of the Islamic finance model. Some are even suggesting Islamic products could provide safe havens in these challenging times."

Events in world markets in recent weeks have illustrated that the Islamic finance industry, cannot remain entirely immune from turmoil on global markets. It has, however, avoided the toxic debt problems of the conventional industry.

Nevertheless, the Islamic debt market, which was doubling in size every year reaching a total of $90 billion, has slowed. In the first eight months of this year, Sukuk (Islamic bond) issuance fell to $14 billion compared $23 billion over the same period last year, according to Standards & Poor's.

"Some blame the credit crunch for reducing the appetite for risk while others believe restrictive definitions by prominent Islamic scholars on what constitutes Sukuk have made institutions more cautious," Taneja said.

Whatever the reason, Sukuk are still being issued despite the uncertain markets, with most expecting these asset-based instruments to receive a lift, particular from governments. Standard & Poor's, for example, expects total Sukuk issuance to reach $25 billion this year.

Sukuk structures and capital markets will come under examination at the Istanbul forum as well as emerging Takaful development; Islamic jurisprudence; alternative asset classes including private equity and real estate; and sustainability with the greening of Islamic finance.

A special session on Turkey at the crossroads will take place at the Istanbul forum which will also examine the status of Turkey's attempts to become a member of the European Union. The results of a study on the impact of politics on the underdevelopment of Islamic finance in Turkey will also be presented.

For more details about the 2008 International Islamic Finance Forum in Istanbul, please visit: www.iiff.com

About the International Islamic Finance Forum

Established in Dubai eight years ago by the IIR Middle East, the International Islamic Finance Forum is considered the premier event in the Islamic finance event calendar with many imitators but no equals. The International Islamic Finance Forum taking place from 13-17 October 2008 at the Çirağan Palace Kempinski Hotel, Istanbul, will be the forum's 15th edition.

The International Islamic Finance Forum is a truly global event attended by companies, organisations and individuals from across the world.

Pioneering international Islamic finance practitioners and the world's leading Islamic finance scholars will meet at the Istanbul forum for the most important networking event in the Islamic finance industry calendar.

http://www.islamonline.com/news/news...p?newid=168919

FiAmaaniAllah

[KAding]

The current crisis has little to with interests from what I understand though? Subprime lending is just that, lending at higher risk because those borrowers are at a higher chance of defaulting on their loans, i.e. they might not be actually be able to afford the loan. This seems unrelated to whether you engage in usury or not? Or are there other principle in Islamic banking that would prevent such "subprime" transactions?

[nocturnal]

You know what i find most interesting about this whole episode, the fact that governments everywhere are frenetically scrambling to secure billions in bail out plans. Yet this whole notion contradicts the basis of a free market economic system, where government intervention is highly derided

But i suppose the fact that whole economies were at risk really forced the hands of politicans into taking such unprecedented economic steps to avert full blown economic collapse and recession in their respective nations.

[islamirama]

Islamic Banks Withstand Mortgage Crisis

"The Islamic bank has a fantastic year, the underlying trend of Islamic banking businesses within ABC is very good," said Smith. (Reuters)


MANAMA — Islamic banks have succeeded where all others have failed, withstanding the US subprime mortgage crisis which left global markets rattling.

"The Islamic bank has a fantastic year, the underlying trend of Islamic banking businesses within ABC is very good," a senior official of the Arab Banking Corporation told the Reuters Islamic Finance summit on Monday, February 4.

Duncan Smith, the head of the Corporation's Islamic operations, said a focus on regional business and efforts to ensure products complied with Shari`ah helped shield his unit from credit-market losses.

The bank's 2007 earnings from conventional non-Islamic departments fell to $125 million from $202 million in 2006.

The ongoing American subprime mortgage crisis, which is making international headlines, was sparked off last year when a steep rise in the rate of foreclosures caused more than 100 lenders to fail or file for bankruptcy.

The crisis had a domino effect on the US economy and stock market, which in turn affected almost all stock markets worldwide as early as last month.
Global banks have written down more than $80 billion in credit market losses since October alone as defaults on subprime mortgages triggered a credit crisis that threatens to tip the US economy into recession.

None of Malaysia's Islamic banks have been hit by write-downs resulting from the crisis and the resulting global credit crunch, second finance minister Mohamed Nor Yakcop told the three-day summit in the Bahraini capital Manama.

He said holders of sukuk or Islamic bonds have been shielded from the worst effects of the subprime mortgage meltdown.

Instead of interest, Islamic banks operate on the principle of sharing risk and reward among all parties in a business venture.

Growing


"Sukuk has now become a very popular product," said Nor Mohammad. (Reuters)

Economists say the global credit crunch triggered by the subprime crisis has spurred greater interest in Shari`ah-compliant financing.

"There is a feeling that the way Islamic finance is structured — the lack of freedom in leveraging, the need for real assets — that there will be some who will find Islamic financing interesting," said the Malaysian official.

He said interest in financial instruments that comply with Islamic prohibitions against investing in sectors such as alcohol, pornography and gambling was starting to emerge in China and South Korea.

"Sukuk has now become a very popular product," Mohamed Nor stressed, adding that officials from Hong Kong had consulted with Malaysia on Islamic finance.

Rasheed al-Maraj, the governor of Bahrain's Central Bank, believes the mortgage crisis could encourage weary investors to throw their weight behind Islamic assets and stocks given the collapse of Western asset prices.

"Maybe Islamic banking will be a safe bet for them," he said.

"I think opportunities exist in the United States and Europe as a result of this financial distress."

Giant banks like America's Citigroup, Britain's HSBC and Germany's Deutsche Bank recently launched Shari`ah-compliant branches.

A Deutsche Bank executive told Reuters that it was helping US and Canadian firms to sell Islamic bonds in Malaysia this year worth between $300-500 million in ringgit.

Having about 76 percent of the world's Islamic bonds, Malaysia has been promoting itself as a hub for Islamic finance but faces rivalry from neighboring Singapore and Brunei.

The Islamic banking industry, which began almost three decades ago, has made substantial growth and attracted the attention of investors and bankers across the world.

There are an estimated 300 Islamic banks and financial institutions worldwide whose assets are predicted to grow to $1 trillion by 2010.

http://www.islamonline.net/servlet/Satellite?c=Article_C&cid=1201957590961&pagename=Z one-English-News/NWELayout

Hey there! Looks like you're enjoying the discussion, but you're not signed up for an account.

When you create an account, you can participate in the discussions and share your thoughts. You also get notifications, here and via email, whenever new posts are made. And you can like posts and make new friends.
Sign Up

[islamirama]

Arab world generally safe from world economic turmoil

Galal Fakkar | Arab News

JEDDAH: The individuals living in the Arab world, including the six GCC countries, will be less affected by the current international financial crisis whose brunt will be on banks having investment portfolios in the world markets, particularly in the US, president of the Federation of Arab Banks Adnan Ahmed Youssif told Arab News in an interview yesterday.
He expected the negative impact of the crisis on individuals only for the short-term. Youssif speculated that the crisis might continue for more than 18 months and said the impact of the crisis on Arab banks will vary from one bank to another.

He said Islamic banks will be the least affected by the repercussions of the international financial crisis because of the nature of their transactions in the local markets and because they were not involved in the international banking system. Youssif said his organization had earlier warned banks in the region that such a crisis was imminent due to some signals derived from the performance of the American economy.

“This has reduced the influence of the crisis on the Arab banks,” he said. He expected the return of some Arab investments from outside in the coming period within the precautionary measures being taken by banks and investors to avoid the impact of the crisis.

http://www.arabnews.com/?page=6&section=0&article=115238&d=8&m=10&y=2008

============================

CNBC World - Islamic Finance: Applying religion to economics


http://www.youtube.com/watch?v=xsyWh1DLIUg

[KAding]

None of these articles, however, claim that the Islamic nature of the banks is in itself a protection against such crisis. Rather they are not particularly affected because like it says "they were not involved in the international banking system". This simply has nothing to do with usury, you could have a similar mortgage crisis when avoiding interests. If suddenly a lot of people can no longer pay off their loan a bank will be in trouble, usury or no usury! The issue is how willing banks would be to lend to people who can't really afford it, which from my limited understanding, is not something that is defined in Sha'ria law?

Besides, some of these comments are simply disingenious and betray an obvious bias: "Islamic banks have succeeded where all others have failed". Come on, the majority of banks in de West, certainly outside of the US, have not failed and are still generally making insane profits. Few banks in, for example, Western Europe have had major mortgage write-offs, simply because the majority are not engaged in the sub-prime loan market. The issue here is the reluctance of banks to lend to eachother, which is hurting all those banks who have a liquidity problem and rely heavily on the international loan market.

Note: This is from my understanding anyway ;). I'm not an economist!

[Keltoi]

The issue with the U.S. financial crisis is indeed subprime loans. What happened in the U.S., although it affects the world banking system, is a domestic problem. Although I believe European banks, at least some of them, were guilty of doing the same thing and are in trouble themselves.

As Kading mentioned, it is a problem of liquidity. Banks don't have the money to loan other banks money, which means business can't get loans to run their daily operations. Meaning primarily payroll. That is why the U.S. Treasury Department has taken it upon themselves to funnel money into the market. In this case, $700 Billion.

[aamirsaab]

:sl:
Actually, it comes down to banks behaving immoraly and greedily. Some banks do have the money to loan others but they don't trust one another, so won't loan to each other (lack of confidence and security). I know quite a bit on this topic as we're studying it at uni (two of my modules so far have been directly related to the credit crunch)

If the islamic banks can promise security, then things might just get a little more exciting. Promise security - people put their money into that bank - that bank's shares skyrocket - people start buying more shares (in that company) - economy gets a good ol' boost, as money is flowing again.

But, until security (and confidence!) is restored (in people and banks), get used to the crunch.

....This seems unrelated to whether you engage in usury or not? Or are there other principle in Islamic banking that would prevent such "subprime" transactions

Islamically speaking, subprime mortgages wouldn't be a product available; if you cannot pay the mortgage back, the bank wouldn't loan it to you in the first place. Too risky for everyone involved - the whole point of the islamic banking system is to minimise risk for all parties and create a fair system.

[islamirama]

CNBC World - Islamic Finance: Applying religion to economics


http://www.youtube.com/watch?v=xsyWh1DLIUg

[Najm]

AsSalamOAlaikum WaRehmatuAllah Wabarkatuhu

Islam not only prohibits dealing in interest but also in liquor, pork, gambling, pornography and anything else, which the Shariah (Islamic Law) deems Haram (unlawful). Islamic banking is an instrument for the development of an Islamic economic order. Some of the salient features of this order may be summed up as:

1.While permitting the individual the right to seek his economic well-being, Islam makes a clear distinction between what is Halal (lawful) and what is haram (forbidden) in pursuit of such economic activity. In broad terms, Islam forbids all forms of economic activity, which are morally or socially injurious.

2.While acknowledging the individual's right to ownership of wealth legitimately acquired, Islam makes it obligatory on the individual to spend his wealth judiciously and not to hoard it, keep it idle or to squander it.

3.While allowing an individual to retain any surplus wealth, Islam seeks to reduce the margin of the surplus for the well-being of the community as a whole, in particular the destitute and deprived sections of society by participation in the process of Zakat.

4.While making allowance for the ways of human nature and yet not yielding to the consequences of its worst propensities, Islam seeks to prevent the accumulation of wealth in a few hands to the detriment of society as a whole, by its laws of inheritance.

5.Viewed as a whole, the economic system envisaged by Islam aims at social justice without inhibiting individual enterprise beyond the point where it becomes not only collectively injurious but also individually self-destructive.

...Source...

FiAmaaniAllah

[Najm]

Islamic banks will be the least affected by the repercussions of the international financial crisis because of the nature of their transactions in the local markets and because they were not involved in the international banking system.

the whole point of the islamic banking system is to minimise risk for all parties and create a fair system.

AsSalamOAlaikum WaRehmatuAllah Wabarkatuhu

JazakAllah Khair aamirsaab and islamirama for your posts/comments:D

Would like to add whole idea of islamic banking is that money itself has no intrinsic value, and forbids people from profiting by lending it, without accepting a level of risk – in other words, reeba(interest) cannot be charged!!!!:sunny: SubhaanAllah


FiAmaaniAllah

[islamirama]

Central banks step in to save Gulf markets



RIYADH – After four days of decline, Gulf central banks stepped in to save the local bourses after another day of sharp falls.

The Gulf markets have shed more than $160 billion of their capitalization this week.

Following Wednesday's decline, the UAE central bank dropped the interest rate by 0.50 percent, while the Kuwait Central bank lowered interest rates by 125 basic points.

The Saudi Arabian Monetary Agency (SAMA) announced its readiness to pump SR150 billion upon request.

Saudi authorities have put SR350 billion ($93 billion) at disposal of the Saudi banks to cope with the financial crisis, according to an official.

SAMA, the Kingdom's central bank, has earmarked this sum to be at the disposal of the national banks, said SAMA Deputy Chairman Mohammad Al-Jasser.

Al-Jasser added that SR200 billion were already accessible for the banks and SR150 billion would be made available upon request in the future.

Qatar central bank issued a statement assuring traders that the economy remains solid.

The decisions, according to analysts managed, had a positive impact on the Tadawul in Saudi Arabia, where losses fell from 9 percent to 1.5 percent, while Kuwait fell by 1.4 percent.

The Saudi stock market, the largest in the Arab world, was closed on Thursday after a rollercoaster ride on Wednesday, its final day of trading this week.

After slumping below 6,000 points for the first time in more than 52 months and shedding more than eight percent, Saudi's Tadawul All-Shares Index ended the day down 1.5 percent at 6,160.52 points.

For the week as a whole, the TASI plummeted 17.4 percent following the market's reopening on Monday following the Eid holiday.

Most Arab stock markets rebounded on Thursday, bolstered by interest rate cuts and infusion of fresh liquidity, following this week's battering by concerns over the global financial crisis.

However, after the concerted action by the central banks, six of the seven Gulf stock markets showed moderate to strong gains on Thursday at the close though all of them finished the week sharply down after panic about the global financial meltdown took a heavy toll on share prices.

The Kuwait Stock Exchange, the second largest in the Arab world, finished up 3.8 percent at 11,905.70 points, spurred by reports of a massive government package worth more than $20 billion to assist the financial system.

The KSE index, however, ended the week down 7.3 percent despite Wednesday's interest rate cut by the country's central bank.

The Muscat Securities Market made the strongest recovery on the final day of the trading week, closing up 8.3 percent on 7,178.39 points, leaving it down 9.2 percent for the week.

In the United Arab Emirates, where interest rates were also reduced on Wednesday, the Dubai Financial Market Index reversed a small part of the 25 percent losses it has accumulated in the past four days.

The index bounced 3.7 percent to close on 3,198.09 points, remaining a massive 22.5 percent below last week's finish.
DFM was supported by the telecom and real estate sectors which rose 9.3 percent and 5 percent, respectively.

UAE neighbor the Abu Dhabi Securities Exchange, closed up 1 percent on 3,207.30 points on the back of a 3.7 percent rise by the real estate sector.

The UAE also cut interest rates on Wednesday.

Like other markets, Abu Dhabi finished the week sharply lower, registering a 18.9 percent decline. –
In gas-rich Qatar, the Doha Securities Market increased 1.9 percent to close on 7,573.62 points. It has shed 18.7 percent in the week. – Agencie

http://www.saudigazette.com.sa/index...=2008101018800


Imitate the kuffars in unislamic and haram way of banking and share their fate :)

[islamirama]

Iceland teeters on the brink of bankruptcy

By JANE WARDELL, AP Business Writer Tue Oct 7, 2008



REYKJAVIK, Iceland - This volcanic island near the Arctic Circle is on the brink of becoming the first "national bankruptcy" of the global financial meltdown.



Home to just 320,000 people on a territory the size of Kentucky, Iceland has formidable international reach because of an outsized banking sector that set out with Viking confidence to conquer swaths of the British economy — from fashion retailers to top soccer teams.


The strategy gave Icelanders one of the world's highest per capita incomes. But now they are watching helplessly as their economy implodes — their currency losing almost half its value, and their heavily exposed banks collapsing under the weight of debts incurred by lending in the boom times.


"Everything is closed. We couldn't sell our stock or take money from the bank," said Johann Sigurdsson as he left a branch of Landsbanki in downtown Reykjavik.


The government had earlier announced it had nationalized the bank under emergency laws enacted to deal with the crisis.


"We have been forced to take decisive action to save the country," Prime Minister Geir H. Haarde said of those sweeping new powers that allow the government to take over companies, limit the authority of boards, and call shareholder meetings.


A full-blown collapse of Iceland's financial system would send shock waves across Europe, given the heavy investment by Icelandic banks and companies across the continent.


One of Iceland's biggest companies, retailing investment group Baugur, owns or has stakes in dozens of major European retailers — including enough to make it the largest private company in Britain, where it owns a handful of stores such as the famous toy store Hamley's.


Kaupthing, Iceland's largest bank and one of those whose share trading was suspended last week to stop a huge sell-off, has also invested in European retail groups.


Thousands of Britons have accounts with Icesave, the online arm of Landsbanki that regulators said was likely to file for bankruptcy after it stopped permitting customers to withdraw money from their accounts Tuesday.


To try to wrest control of the spiraling situation, the government also loaned $680 million to Kaupthing to tide it over and said it was negotiating a $5.4 billion loan from Russia to shore up the nation's finances.


The speed of Iceland's downfall in the week since it announced it was nationalizing Glitnir bank, the country's third largest, caught many by surprise despite warnings that it was the "canary in the coal mine" of the global credit squeeze.


Famous for its cod fishing industry, geysers, moonscape and the Blue Lagoon, Iceland was the site of the Cold War showdown in which Bobby Fischer of the United States defeated Boris Spassky of the Soviet Union in 1972 for the world chess championship. Last year, Iceland won the U.N.'s "best country to live in" poll, with its residents deemed the most contented in the world.
No more.


Despite sunny skies Tuesday after three days of unseasonably cold weather, Reykjavik's mood remained grim — cafes were half-empty, real estate agents sat idle, and retailers reported few sales.


"I'm really starting to get worried now. Everything is bad news. I don't know what's happening," said retiree Helga Jonsdottir as she headed to a supermarket.


Icelanders are also beginning to question how a relative few were able to generate the disproportionate wealth — and associated debt — that Haarde has warned puts the entire country at risk of bankruptcy.


Iceland's reinvention from the poor cousin in Europe to one of the region's wealthiest countries dates to the deregulation of the banking industry and the creation of the domestic stock market in the mid-1990s.



Those free market reforms turned Iceland from a conservative, inward-looking country to one of a new generation of internationally educated young businessmen and women who were determined to give Iceland a modern profile far beyond its fishing base.
Entrepreneurs become its greatest export, as banks and companies marched across Europe and their acquisition wallets were filled by a stock market boom and a well-funded pension system. Among the purchases were the iconic Hamley's toy store and the West Ham soccer team.



Back home, the average family's wealth soared 45 percent in half a decade and gross domestic product rose at around 5 percent a year.



But the whole system was built on a shaky foundation of foreign debt.


The country's top four banks now hold foreign liabilities in excess of $100 billion, debts that dwarf Iceland's gross domestic product of $14 billion.



Those external liabilities mean the private sector has had great difficulty financing its debts, such as the more than $5.25 billion racked up by Kaupthing in five years to help fund British deals.



Iceland is unique "because the sheer size of its financial sector puts it in a vulnerable situation, and its currency has always been seen as a high risk and high yield," said Venla Sipila, a senior economist at Global Insight in London.



The krona is suffering in part from a withdrawal by a falloff in what are called carry trades — where investors borrow cheaply in a country with low rates, such as Japan, and invest in a country where returns, and often risks, are higher.



After watching the free-fall for several days, the Central Bank of Iceland stepped in Tuesday to fix the exchange rate of the currency at 175 — a level equal to 131 krona against the euro.



Haarde said he believed the measures had renewed confidence in the system. He also was critical of the lack of an Europe-wide response to the crisis, saying Iceland had been forced to adopt an "every-country-for-itself" mentality.



He acknowledged that Iceland's financial reputation was likely to suffer from both the crisis and the response despite strong fundamentals such as the fishing industry and clean and renewable energy resources.



As regular Icelanders begin to blame the government and market regulators, Haarde said the banks had been "victims of external circumstances."



Richard Portes of the London Business School agreed, noting the banks were well-capitalized and had not bought any of the toxic debt that has brought down banks elsewhere.



"I believe it is absolutely wrong to say these banks were reckless," said. "Quite the contrary. They were hugely unlucky."

http://news.yahoo.com/s/ap/20081008/ap_on_re_eu/eu_iceland_meltdown;_ylt=Al8J9zdJ4gSz1IrMVFVVN6O9I xIF

[islamirama]

Non-Muslims Favor Islamic Finance

http://www.islamonline.net/servlet/Satellite?c=Article_C&cid=1195032536309&pagename=Z one-English-News/NWELayou

CAIRO — Islamic finance, an industry picking up steam worldwide, is increasingly appealing to non-Muslims who find the Shari`ah -compliant service much fairer than traditional banking. "The terms are better than on conventional loans," David Ong-Yeoh, a Malaysian public relations executive, told the New York Times on Thursday, November 22.

Islam forbids Muslims from receiving or paying interest on loans.

Shari`ah-compliant Islamic banking operates by sharing profit or loss between the bank and its clients.

Financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.

Ong-Yeoh, 41, is one of many non-Muslims opting for a growing range of Islamic products offering competitive returns.

He first sought a 30-year fixed loan from an Islamic financial institution for his home. He later took another Islamic loan for his car.

"It’s just taking advantage of the system."

Ong-Yeoh is not alone.

E-lene Kee, a Buddhist corporate lawyer, advises clients to use Islamic loans to finance construction projects.

"We look at these things just like Apple or Berkshire Hathaway."

At Kuwait Finance House’s Malaysian unit 40 percent of the depositors and 60 percent of its borrowers are non-Muslims.

"It’s about respecting the interests of the different parties, avoiding taking advantage of any situation of any counterparty and putting in place fair treatment," explains Rasheed Mohammed al-Maraj, governor of the central bank of Bahrain.

In addition to Islamic loans, there are Islamic bonds, Islamic credit cards and Islamic derivatives.

Islamic bankers cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.

Booming

Islamic finance is already one of the fastest growing sectors in the global financial industry.

Hang Seng Bank, the second largest bank in Hong Kong and a subsidiary of global banking giant HSBC, launched on Thursday the Hang Seng Islamic China Index Fund, Hong Kong's first Islamic fund.

"The Fund will help investors capture the potential investment returns generated by growing international interest in these markets," said William Leung, general manager of the bank's personal financial services and wealth management.

Hang Seng is only the latest in a long list of international institutions, including Citigroup, HSBC and Deutsche Bank, going into the Islamic banking business.

Currently, there are nearly 300 Islamic banks and financial institutions worldwide whose assets are predicted to grow to $1 trillion by 2013.

In Asia, Islamic finance is growing in double digits, with predominantly-Muslim Malaysia effectively establishing itself as a regional, if not global, hub.

Indonesia, Thailand and Singapore are also among the countries promoting Islamic finance.

In the Middle East, Saudi Arabia’s largest lender, National Commercial Bank, overhauled its entire retail business to make it Shari`ah-compliant.

Tunisia and Morocco have also authorized their first Islamic banks this year.
Shari`ah -compliant loans and bonds are already available in the US and Britain has decided to do the same.

"This is an industry on its way from a niche industry to becoming a truly global industry," Khawaja Mohammad Salman Younis, the managing director for operations in Malaysia for Kuwait Finance House, told the Times.

"In the next three to five years you’ll see Islamic banks coming out in Australia, China, Japan and other parts of the world."



Related Links:
· Debt-ridden Americans Change Lifestyle
· Islamic Banks Withstand Mortgage Crisis
· Islamic Loan Funds London Real Estate
· Islamic Finance fulfills US Home Dream
· Islamic Loans Serve Non-Muslim Malawians




CNBC World - Islamic Finance: Applying religion to economics - http://www.youtube.com/watch?v=xsyWh1DLIUg

[Pk_#2]

Has any one heard the credit crunch song? =P

I didn't think a 'Credit Crunch' Thread would get THAT many views!

[islamirama]

Has any one heard the credit crunch song? =P

I didn't think a 'Credit Crunch' Thread would get THAT many views!

probably because of the articles i keep posting on isamic finance :D

[islamirama]

Look at these Kuffar. They are changing their laws just to attract Islamic finance so they can get money, but when it comes to muslim women covering up then these kuffar create laws to stop them. hypocrites only love money.

France eyes Islamic finance

PARIS — France's recently-announced readiness to clear hurdles to Islamic finance reflects a desire to jump on the wagon of the globally-booming industry, analysts believe.

"It's a strong signal and the players are listening," analyst Emmanuel Volland of the ratings agency Standard and Poor's told Agence France Presse (AFP) on Tuesday.

France has recently announced plans to adjust its economic and legal frameworks to accommodate Islamic banking activities.

Economy Minister Christine Lagarde has briefed Gulf investors on steps "to make (their) activities as welcome in Paris as they are in London and elsewhere."

The government is expected to announce fiscal and legal adjustments to accommodate the Shari`ah-compliant industry before the end of July.
The modifications will facilitate the issuance of Islamic bonds (Sukuk) and structured real estate transactions.

Islam forbids Muslims from usury, receiving or paying interest on loans.
Islamic banks and finance institutions cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.

Shari`ah-compliant financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.
France, home to seven million Muslims, the biggest Muslim minority in Europe, currently does not offer Islamic banking services.

Challenges

Volland noted that Lagarde's address to the Gulf businessmen was "the first time that a representative of the state has said publicly that she is favorable to the development of Islamic finance."

Islamic finance is one of the fastest growing sectors in the global financial industry.

In defiance of the credit crunch, the global Islamic finance market has grown about 15 percent in each of the past three years, and is now worth about $700 billion worldwide. Its assets are predicted to grow to $1 trillion by 2013.

Renowned world banks like Citigroup, HSBC and Deutsche Bank, as well as financial capitals like London, Tokyo and Hong Kong, are all going into the Islamic banking business.

Analysts believe France wants a main share of the Islamic finance cake by attracting some of the Gulf-based investments currently flowing to London and other European capitals.

They maintain that France's road to establish a leading position in the Islamic finance industry would need more than fiscal and legal adjustments.
The government pronouncements "are not in themselves sufficient to ensure the blossoming of Islamic finance here," Anwar Hassan from the U.S. credit rating agency Moody's told AFP.

He explained that Paris should not be content simply to reduce "legal or fiscal irritants" but should, for example, issue sukuk just as Britain plans to do next year.

Experts also believe that the challenge is not purely technical or limited to establishing an infrastructure receptive to Islamic finance.

Hassan says that convincing the French public of the soundness of Islamic finance would be a real test.

But he believes that offering Islamic banking would provide an attractive alterative to French companies currently penalized by increasingly costly bank credit.

The task, contends the expert, will be to show that Islamic finance offers "an ethical, modern finance alternative."

Source: IslamOnline

[Najm]

probably because of the articles i keep posting on isamic finance :D

AsSalamOAlaikum WaRehmatuAllah WaBarkatuhu

Akhi, its kool you post sooo many good articles on islamic finance, so much to learn about Islam!!!!

Ahki are all banks islamic as they say that are :? Wth the issue of bonds, a lot is simply un-islamic:unhappy:, hummm looking for a reference though lol

FiAmaaniAllah

[islamirama]

Australia: Finance for a new world


Islamic finance is becoming a major area now even outside Islamic jurisdictions. Amal Awad takes a look at the first steps in Australia to create financial products compliant with Shariah law.

Arguably, the quintessential Aussie dream has always been to “own your own home”. With mortgages offered at all major banking and finance institutions, it’s certainly an attainable – albeit costly – one for many Australians. However, until recently, for many Australian Muslims this dream has proven even more difficult to realise due to the Islamic prohibition on dealing with interest.

Given that all Western banking and regulatory systems deal in interest, it has proven a significant challenge to develop and deliver sound “Shariah-compliant” products that will cater to observant Muslims’ unique needs.
Certainly, Islamic finance is gaining momentum and attention on the global stage. Besides catering to the Muslim markets throughout the world, particularly in the Middle East and South-East Asia, the combination of ethical, social and financial considerations make Islamic finance an increasingly attractive proposition.

Reports estimate there are approximately 300 Islamic financial institutions worldwide with assets amounting to more than US$300 billion ($333 billion) and financial investments estimated at US$400 billion ($445 billion). In 2006, there were 126 Islamic equity funds collectively valued at US$16 billion ($18 billion). The US is also host to a growing Islamic mortgage market.

Still, while increased demand for halal (permissible) investment and lending options has precipitated an influx of Shariah-compliant transactions overseas, the Islamic finance industry in Australia is small by comparison. We’re yet to see, for example, the establishment of an Islamic bank, and there are no halal mainstream superannuation funds or insurance options (the Islamic concept of mutual insurance takaful) for Muslim consumers.
Some might argue this is due to a lack of demand, yet there is no denying that Islamic finance is already taking shape in Australia – particularly in home lending.

KPMG has recognised the international growth in other areas too, and is currently involved in promoting Islamic finance to potential clients here.
“We’ve got a large Islamic finance group based in London and Malaysia – they’re the two main centres. In Australia ... we’ve been having some chats with the major banks,” says KPMG’s Andrew Reynolds, associate director, financial services, based in Perth.

“We’re doing some demographic studies and essentially we’re putting together a business case for [Islamic financial transactions] here.” While KPMG don’t offer financial services in Australia themselves, they act in an advisory or audit capacity to institutions that do offer them.

matter of interest

Beyond issues of ethical investment, Islamic finance develops and offers various systems designed to adhere to strict financial principles. This means no interest and favours a “profit-sharing” model and the sharing of financial risks.

Specifically, Muslims are instructed not to deal with riba. This is most simply defined as “interest”, although its meaning runs deeper. “Different jurisprudential traditions have different perspectives over what exactly constitutes riba. When I’m presenting on it, I say it’s normally defined as being interest but there are shades of grey,” says Reynolds, who has developed a level of expertise in the area of Islamic finance.

In addition to establishing Islamic finance initiatives with clients, Reynolds is a contributor to Business Islamica magazine in Dubai, and in May 2007 he attended the World Islamic Funds Management conference in Bahrain as a speaker.

“In Australia we see two separate markets,” explains Reynolds. “One is the domestic Australian Muslim; those who live here, work here and require financial services. The other is essentially offering services to Muslims resident overseas.”

In the Persian Gulf alone there exists a pool of investable funds – estimates have it upwards of US$50 billion ($56 billion). “Obviously because they can’t take interest, when the funds are sitting uninvested, they’re completely idle. So part of what we can do is to work with our practices in Bahrain [and] Dubai ... and say ‘These are the investment opportunities for these funds’. And then work with our domestic clients who require funds to invest them here.”

So far, Islamic finance transactions are being offered in Australia by at least two small institutions. Iskan Finance (Iskan) and the Muslim Community Co-operative (Australia) Ltd (MCCA). Both offer mortgages based on Islamic systems of lending for homebuyers. With endorsement from Islamic scholars, their products are promoted as Shariah-compliant and primarily cater to the Muslim market.

“Islamic finance is not a new phenomenon,” points out Neil Aykan, MCCA’s public relations manager. “The system has made a dramatic comeback in the past 20 years, fuelled [in part] by Islam emerging as the world’s fastest-growing religion, with more than 1 billion followers worldwide.”
In fact, MCCA has been running since 1989, as a credit provider and mortgage originator. Today it boasts 7,000 member shareholders who are also the customers of its finance and investment products.

“It is the product of the collective effort of Muslim community leaders, accountants, bankers and Islamic scholars over the past decade to develop financial solutions that meet the religious requirements of practising Muslims within a conventional framework,” says Aykan. “There is a huge demand both here in Australia and globally, due to the total potential size of the Muslim market and also due to Muslims now rediscovering their Islamic values.”

Its competitor, Iskan, was established in 2001 by econometrician Malik Helweh. Having worked in the Persian Gulf for more than 10 years, he gained experience working with Islamic bankers. “I identified the need to deliver a very high quality and a competitive housing finance instrument to enable Australian Muslims to own their own homes, exactly as all other Australian aspire,” says Helweh. Working throughout Australia, Iskan offers housing finance products that are Shariah-compliant. “We are constantly researching the market and endeavour to produce appropriate funding instruments to satisfy the ever-growing community and its financial needs.”

With 2006 census figures numbering Australian Muslims at just over 340,000, there is a sizeable market, and these providers confirm that there is also substantial demand.

“For years Muslims have been using the conventional interest-based system due to a lack of choice. Today they have a real choice,” says Aykan.

He adds that MCCA is a competitive option because they do not prescribe ongoing fees and charges for their transactions, and they offer competitive rates. There is also a social and civic conscience. “MCCA is actively involved in the community, as it’s owned by the community,” says Aykan.

“There is a market here,” confirms KPMG’s Reynolds. But he is looking beyond basic banking and lending options. “What I’d like to be able to do is to work with our clients to bring to that market an appropriate array of products. They’re not difficult, they’re not expensive, and they may well be attractive to those of us who aren’t Muslim. A fully invested equity fund is likely to produce higher returns than one with a large chunk of bonds in there. They’re just going to be more volatile,” he explains.

The response

The emergence of halal financial products in Australia is not without its share of scrutiny and resistance however, and debate surrounding these transactions is certainly robust. Even though these products require certification from qualified Islamic scholars in order to be deemed Shariah-compliant, globally and locally, many question just how “halal” some of these transactions really are.

“The main expression of concern is that we source our funds from an external, non-Muslim run investment firm,” says MCCA’s Aykan. “Ideally, we’d like to source our funds from an Islamic bank. But until an Islamic bank or an Islamic investment firm sets up shop in Australia, we don’t have an alternative.”

Originally, MCCA’s funding was all their own. He points out, however, that while they’ve had to source funding from a local investment firm to meet growing demand, that firm doesn’t provide money derived from Islamically impermissible transactions.

But given the diversity of transactions internationally, debate concentrates on more than mortgages.

“I would agree that there’s some cynicism and in some cases there may be grounds for that,” says Reynolds. “It is fairly complex which is why I feel people like myself who are experienced in financial services have a role to play. I’m not well-versed in Shariah, but what I can do is work with the scholars to [explain] the sorts of issues that we typically see.”

Melbourne-based Muslim writer Amir Butler agrees. “Islamic finance is one of the most complex fields within Islamic law and therefore it is naturally controversial.”

In addition to concerns about the source of funds, as well as differences in scholarly opinion about fundamental aspects of Islamic finance, these products “are often more expensive than normal products because there is an increased transactional cost associated with them”, he says.

Overseas, Butler says some products resemble normal riba-based products. For example, they might replace the word “interest” with “profit”, which he says is a fairly superficial change. “They are often described by some scholars as engaging in hila (trickery) by trying to turn a haram (forbidden) transaction into a halal one by playing with words and terms.”

Having written on the issue in the past, Butler notes the often controversial debate on these issues, but he doesn’t think it’s necessarily well-informed.

“Most people lack the Islamic knowledge to properly assess these products and many of those who might possess some knowledge about the Islamic aspects often lack in their understanding of finance or the legal framework in which Islamic banking must operate in the West,” he says.

Helweh, who says Islamic financial issues provoke both positive and negative responses from the community, similarly suggests that much of the debate stems from a lack of knowledge on Islamic finance in Australia. He says Iskan has scholarly backing. “Initially Iskan sought international help from individual scholars as well as Al-Azhar University [in Egypt]. We then formed our own Shariah committee, which included local scholars. However, we maintained our links to the international scholars and we seek their opinions and advice whenever required.”

While MCCA’s scholarly advisers have approved their products, Aykan points out that other scholars may disagree with these rulings. “[Our advisers] have exercised their expert reasoning and ruled that MCCA’s product offerings as structured are permissible. This doesn’t preclude the possibility that other ... scholars may exercise their own independent reasoning and arrive at a different ruling.”

Ultimately, Muslims may scrutinise these products, but it may simply come down to what the local sheikh says. While some will support the initiatives of existing institutions, others might forbid them.

“The problem,” says Butler, “is that there isn’t a great deal of knowledge about these issues in Australia and so you often end up with the perverse situation where all these people are clambering to denounce particular products but can never seem to explain what exactly needs to be done to make them halal because they either don’t know or don’t understand that legislative and/or economic context that these products must operate in.”

Mind the gaps

Iskan’s Helweh is also at the helm of SalicSuper, a public superannuation fund which aims to provide Australian Muslims with access to halal superannuation investment. “The product ... has been receiving significant support from the community and financial planners,” he says. “Our recent profits on all investment options within the fund were very encouraging indeed.”

Helweh has certainly identified a major gap in Muslim-friendly finance options. In addition to a dearth of halal insurance products, none of the major superannuation funds offer halal investment products.

“I don’t think any of the major superannuation providers have any products that are free of interest, never mind alcohol products and so on,” says KPMG’s Reynolds, referring to the Islamic prohibition on investing in alcohol, tobacco and gambling products. He adds: “None of the managed investment schemes [have Shariah-compliant certification] – but quite a few of them are actually, I believe, halal.”

Reynolds suggests that a halal superannuation product is, at its simplest, another form of ethical investment. “A fully invested ASX 200 equity product, for example ... making sure that there [are] exclusions in there – so no Carlton United, no Fosters, etc, would work. And I think certification for that sort of product would be fairly simple. So there’s no real impediment to putting it together, it’s just that nobody’s done it.”

Another gap exists in the absence of basic Islamic banking options. Iskan and MCCA are not authorised deposit-taking institutions, however, as Reynolds points out, there are still some options for consumers not wishing to deal with interest. “There are several products that a conventional bank already offers that are halal. [One] is a non-interest bearing cheque bank account. That’s perfectly acceptable. It pays no interest, it receives no interest and is a product that works.”

http://www.lawyersweekly.com.au/articles/Finance-for-a-new-world_z130673.htm

[islamirama]

AsSalamOAlaikum WaRehmatuAllah WaBarkatuhu

Akhi, its kool you post sooo many good articles on islamic finance, so much to learn about Islam!!!!

Ahki are all banks islamic as they say that are :? Wth the issue of bonds, a lot is simply un-islamic:unhappy:, hummm looking for a reference though lol

FiAmaaniAllah

:wasalamex

No bro, not all banks are islamic. There are banks that claim they are islamic but they are not, they just coined another term for riba or other unilslamic transaction trying to excuse it as permissible. And then there are banks that are islamic in the pure sense of the word and do try to conduct everything in a shar'iah based guidelines.

The same goes for companies, there are some companies out there that have islamic bands and other investing options a Muslim can utitilze. You would have to search on what they offer and then check on how much islamically acceptable that is.

Here' are good refrences to look at inshallah

http://www.lariba.com/knowledge-cent...difference.htm

http://www.ruf.rice.edu/~elgamal/files/primer.pdf

[islamirama]

Muslim Investment Funds Are Rewarded for Their Faith

By Lawrence Carrel
TheStreet.com Senior Writer

http://www.thestreet.com/story/10395700/1/muslim-funds-are-rewarded-for-their-faith.html

Islamic law prohibits the collection and payment of interest. That means mutual funds aimed at Muslim investors must avoid financial services stocks.

This proved to be a winning formula in 2007, when Wall Street finally paid the price for several years’ worth of predatory lending to financially strapped homeowners.

During the long housing boom, mortgage banks loosened their lending criteria, making it possible for people with poor credit to buy homes they ultimately couldn’t afford. Many of these mortgages had low introductory rates that reset after several years, pushing monthly payments up. Some sported onerous prepayment penalties.

Doesn’t sound very halal.

As long as housing prices kept rising, many borrowers were able to refinance before rates reset, keeping payments low. But as the real estate market softened, more and more fell behind on their payments, ultimately defaulting. .

Muslim funds’ aversion to the financial sector largely inoculated them from the mortgage crisis, keeping them healthy as the contagion spread across broad swathes of domestic stock and bond funds.

While the S&P 500 remained up 4.9% for the year through Friday, three funds that invest according to the Koran have significantly outperformed the benchmark. The Amana Trust Income Fund (AMANX) return of 13.3% through Dec. 21, beating the S&P 500 by 8.4 percentage points, while its sibling, the Amana Trust Growth Fund (AMAGX), gained 11.7%.

And the Dow Jones Islamic Index Fund (IMANX) climbed 14.7% so far this year. It is run by Allied Asset Advisors of Burr Ridge, Ill.

Among other Muslim funds, the Azzad Ethical Mid Cap Fund (ADJEX) gained 11.95% so far this year, and the Azzad Ethical Income (AEIFX) rose 8%. Both are managed out of Falls Church, VA.

The Amana funds, managed by Saturna Capital of Bellingham, Wash., are also ahead of the S&P 500’s annualized return for the past three and five years, earning them five-star ratings from Morningstar.

The Amana Trust Income Fund, with $339 million in assets, posted the fourth highest return this year of large-cap value funds tracked by Morningstar, helped by its large holdings of technology, healthcare, and commodity stocks.

Monem Salam, Amana’s deputy portfolio manager, says a lot of the money coming out of financials is entering technology. And Amana has been building this position all year long. Apple is the largest holding of the Amana Trust Growth Fund.

"We don't think it's overvalued," says Salam. "They have a lot going for them with new products like the iPhone and a deal with China Mobile (CHL - Cramer's Take - Stockpickr). There is a halo affect from the iPod and Notebooks. We would buy on 10% pullbacks."

The fund manager also likes Seagate Technology(STX - Cramer's Take - Stockpickr) which is posting double-digit revenue growth on surging demand for more memory, both flash and RAM, which is used in hard drives. Salam says memory demand will keep increasing.

Commodities make up a large part of the Amana Trust Income fund. Freeport-McMoran Copper & Gold (FCX - Cramer's Take - Stockpickr) is the top holding. Salam also likes natural resource company EnCana (ECA - Cramer's Take - Stockpickr), one of the largest Canadian natural resource companies. The company extracts oil from the sands of Saskatchewan, and as long as oil stays above $50 it's worth it for them to continue, says Salam.

In addition to financials, Muslim funds also avoid stocks of pork producers, but this hasn't had a noticeable effect on their performance.

Among other Muslim funds, the (ADJEX - Cramer's Take - Stockpickr) Azzad Ethical Mid Cap Fund (ADJEX) gained 11.95% so far this year, and the (AEIFX - Cramer's Take - Stockpickr) Azzad Ethical Income (AEIFX) rose 8%. Both are managed out of Falls Church, VA.

And the (IMANX - Cramer's Take - Stockpickr) Dow Jones Islamic Index Fund (IMANX) climbed 14.7% so far this year. It is run by Allied Asset Advisors of Burr Ridge, Ill.

Christian Investment Funds

Some funds that invest according to Christian principals haven't been so blessed. The New Covenant Trust funds, were created in 1971 to give the Presbyterian Foundation a place to invest while staying true to church doctrine. Not wanting to invest in companies harmful to mankind, they avoid companies related to alcohol, tobacco, gambling and weapons. After receiving the list of no-nos, the fund managers are allowed to invest in anything else that strikes their fancy.

It just so happens that financials struck their fancy.

At around 18%, financial services is the largest sector in the company's $981 million flagship fund, the New Covenant Growth Fund (NCGFX). The fund is up 3.0% year to date, lagging the S&P 500 by a full a percentage point. It's also lagging the average performance of its large-blend fund peers by 1.2 percentage points, according to Morningstar.

New Covenant Growth's top holding is Bank of America, along with Citigroup and General Electric, the latter of which receives a large share of revenue from commericial finance.

The best performer of this four-fund family is the New Covenant Balanced Income Fund , up 4.6% year to date. Morningstar gives it three stars and classifies it as a conservative allocation fund. In this case, conservative refers to risk aversion, not political leanings. All four funds failed to meet their benchmarks last year. They appear on target to continue the trend in 2007.

For portfolios with Catholic values, look to the Ave Maria funds. These funds screen out all companies with any connection to abortion. This includes pharmaceuticals, hospitals and even health insurance companies, because they offer abortion-inducing drugs. Not surprising, pornography is also a no-no. So is investing in companies that provide benefits, such as health insurance, to non-married couples.

George P. Schwartz, portfolio manager of Ave Maria Catholic Values (AVEMX), says the church believes marriage is a sacrament and that to offer these benefits is a slap in its face. While some might view this as an anti-gay investment screen, the funds don't discriminate. They don't want to support male-female couples living in sin either.

Since smoking, drinking and environmental destruction aren't outlawed by the church, the fund doesn't screen out those companies.

Still, this investment strategy severely narrows the population of possible holdings. Nearly 200 companies in the S&P 500 fail to pass muster. This has led the fund to invest in a lot of small-cap and value-oriented stocks.

These two groups have provided a lethal combination of underperformance this year.

Three of the family's four stock funds are underwater this year. The flagship $257 million Ave Maria Catholic Values has skidded 5.7% year to date. However, the Ave Maria Growth Fund (AVEGX) has posted a nice gain of 11.4% in 2007.

Among Catholic Values Fund's top holdings are Legg Mason, Pulte Homes and Citizens Republic Bancorp.

[Najm]

:wasalamex

No bro, not all banks are islamic. There are banks that claim they are islamic but they are not, they just coined another term for riba or other unilslamic transaction trying to excuse it as permissible. And then there are banks that are islamic in the pure sense of the word and do try to conduct everything in a shar'iah based guidelines.

The same goes for companies, there are some companies out there that have islamic bands and other investing options a Muslim can utitilze. You would have to search on what they offer and then check on how much islamically acceptable that is.

Here' are good refrences to look at inshallah

http://www.lariba.com/knowledge-cent...difference.htm

http://www.ruf.rice.edu/~elgamal/files/primer.pdf

AsSalamOAlaikum WaRehmatuAllah WaBarkatuhu

wow, thats surprising, like evrything else in the world, people dilute islam, even the banks:cry: Thats soooo annoying. I guess as muslims we should pay attention to these banks, and its transactions, and what to avoid or not.

JazakAllah Khair for the reply, and the excellent links!!! :D

FiSabilillah

[Najm]

AsSalamOAlaikum WaRehmathuAllah WaBarkatuhu

Causes of the Crisis

Multiple factors have brought about this crisis: greed, corruption, mismanagement, extravagance, injustice, war, exploitation, riba (usury), etc. Fixing this crisis and bringing the situation back to normal may take years. Meanwhile, it is our turn to learn how to deal with this situation for our own sake and for the sake of our children. When people are in a financial crunch, they normally try to find scapegoats.

In political or financial crises, minorities (whether racial or religious) often suffer more, and we, Muslims, are already under great stress due to negative propaganda. For us, Muslims in America, it is even more important to understand this financial challenge and to face it with wisdom.

According to the Qur'an, money is both a blessing and a trial. It is sometimes called khayr (a blessing) as in Verses 180 and 215 of Surat Al-Baqarah. It is called qiyam (a mean of support) as in Verse 5 of Surat An-Nisaa'. It is also called fadl (a bounty) as in Verse 198 of Surat Al-Baqarah, Verse 10 of Surat Al-Jumu`ah, and Verse 20 of Surat Al-Muzzammil.

However, it is also called mata` (a temporary thing) as in Verse 60 of Surat Al-Qasas. It is called fitnah (a trial) as in Verse 28 of Surat Al-Anfal.

In the Qur'an and the Sunnah of Prophet Muhammad (peace and blessings be upon him), we are reminded again and again to earn in the ways that are honest and halal (permitted by Allah). We are reminded to avoid deceiving, defrauding, cheating, stealing, and being greedy. We are also told that we should use our wealth carefully, without waste or extravagance.



As for the current crisis, I suggest that every one of us deals with it as follows:

1. First and foremost, observe taqwa (piety and fear of Allah) and tawakkul (trust in Allah). Allah has promised in the Qur'an,
   
   (And [for] whosoever keeps his duty to Allah, He will appoint a way out for him and give him sustenance from whence he thinks not, and [for] whosoever trusts in Allah, He is sufficient for him; surely Allah attains His purpose; Allah has indeed appointed a measure for everything.) (At-Talaq 65:2–3)
   
   In this situation, observing taqwa and tawakkul would mean that — first of all — we should not panic; we should remain steadfast and content. It would also mean working hard without doing anything that is haram (prohibited by Allah) or illegal (opposed to the law of the land).
   
2. Second, remember that Islam teaches us to live debt-free. Avoid taking loans as much as possible. However, if you take any loan, pay it off as soon as possible.
   
   Loan with interest is a great wrong that should be completely avoided. The worst loans are those of the credit cards. They can easily be obtained, and they have the highest interest. They already ruined the lives of many middle-income people. Wise people should treat their credit cards just like cash. They should not get into what is called "buying what you do not need with the money that you do not have."
   
3. Third, be careful with your resources. Wastefulness, extravagance, show-off, and unnecessary expenditure are signs of ungratefulness toward Allah. Those who waste their resources and indulge in extravagance are called devils' brothers. Almighty Allah says,
   
   (Surely the squanderers are brothers of the devils, and the devil is ever ungrateful to his Lord.) (Al-Israa' 17:27).
   
4. Fourth, learn how to save money for yourself and for your children. The Prophet said,
   
   "Take advantage of five before five: your youth before your old age, your health before your sickness, your wealth before your poverty, your free time before your becoming [too] busy, your life before your death." (Al-Hakim in Al-Mustadrak)
   
5. Fifth, be smart with your money. Invest it very carefully and always in halal ways. Also, do not be fooled by telemarketers or people who will try to take away your money by giving you many incredible "lucrative" ideas. Some of them may even come to the mosque (also with a very pious look) and then deprive you of your precious earnings or savings. Check out every proposal very carefully and consult with others.
   
6. Sixth, take care of your health. Health costs drain the savings of many people. Find a good health plan and keep it up.
   
7. Seventh, pay your zakah (obligatory alms) in due course and give sadaqah (optional charity) regularly. This is the best way to receive Allah's blessings and to avoid stumbling in difficulties. Help the poor and the needy. Help those who are out of job and are in difficulties. Those who help others will be helped by Allah. The Prophet said,
   
   "The most beloved to Allah among the people are those who are most beneficial to others. The most beloved deeds in the sight of Allah are bringing happiness to a Muslim, removing his or her difficulty, paying off his or her debt, and removing his or her hunger. Going out with my Muslim brother [or sister] to take care of his [or her] need is more beloved to me than spending a month of i`tikaf[spiritual retreat in the mosque]. For those who control their anger, Allah will cover their shortcomings. For those who subdue their revenge that they can carry on, Allah will fill their hearts with happiness on the Day of Judgment. For those who walk with their brothers [or sisters] to take care of their needs, Allah will establish their feet on the Day when the feel will stumble. Bad temper spoils the deed as vinegar spoils honey." (Reported by At-Tabarani in the Kabir and by Ibn Abi Dunya. Al-Albani said it is a good hadith)

I pray to Allah so that He would keep us all on the right path and save us from all difficulties in this world and the hereafter. Amen.

FiAmaaniAllah

[islamirama]

Islamic Finance appeal growing in face of credit crisis

The global credit crisis presents the $1 trillion Islamic finance industry with an opportunity to expand its appeal beyond Muslim investors, as a haven from speculative excess.

The message may have particular resonance in the West after the crumbling of the U.S. mortgage market left banks holding hundreds of billions of dollars of nearly worthless credit instruments tied to home loans by a web of complex structures.

While conventional banks worldwide are nursing losses of more than $400 billion from the credit crisis, Islamic banks are virtually unscathed. And they are playing up the contrast to scalded shareholders, bondholders and borrowers and fearful depositors.

"It's very much a return to old-fashioned conservative lending," said David Testa, chief executive of Gatehouse Bank, which began operations in April as the fifth Islamic bank in Britain.

"The current global market condition has given Islamic finance a great opportunity to show what it can do - help to fill the liquidity gap," he said.

Investors traumatized by the credit crisis could seek comfort from the stricter rules imposed on lending by Islamic law, which bans some of the structures and financing methods that quickly unraveled during the U.S. mortgage crisis.

Testa said that Islamic finance practices were more fiscally conservative, with direct participation by investors in plans that do not involve parking assets in off-balance-sheet vehicles.

Islamic finance is based on Shariah, or Islamic law. It requires that gains be derived from ethical and socially responsible investments and discourages interest-based banking and investments in sectors like pork, gambling and pornography.

The Asian Development Bank estimates that Islamic assets globally have a combined value of about $1 trillion, with annual growth of 10 percent to 15 percent a year. Al-Rajhi Bank of Saudi Arabia and Kuwait Finance House are the two biggest Islamic banks in the Gulf region. In Malaysia, the largest Islamic lender is Maybank Islamic, a subsidiary of Malayan Banking.

The jump in popularity of Islamic finance is drawing the interest of companies outside the Middle East.

City Developments, one of the largest developers in Southeast Asia, said last week that it could issue Islamic debt and sell hotels to enhance its ability to make acquisitions.

The Islamic finance industry, which was nearly nonexistent 30 years ago, has certain distinguishing features that make it less risky, analysts say.

Islamic bonds, or sukuk, replace coupons with payments backed by the performance of tangible assets. Islamic law prohibits the payment of interest and requires transactions to be linked to assets, thus deterring the kind of complexities prevalent in conventional financing operations.

Debashis Dey, the Dubai-based head of capital markets at the law firm Clifford Chance, said that although the Islamic finance industry was adapting conventional products to make them compliant with Shariah, it was a long way from sophisticated products like collateralized debt obligations.

But while Islamic products are coming into favor, analysts say market commentators and intermediaries may be too zealous in promoting the merits of Islamic finance as a safe product.

Mohamed Damak of Standard & Poor's cited the case of the boom in real estate financing in the Gulf mainly by Islamic banks in the past three years, amid soaring property prices.

"A correction of the real estate sector would impact Islamic banks involved in this business line. Islamic finance is not immune from risk," he said.

Even as experts are weighing the degree of insularity that Islamic financing provides, there are differences in the way accounts are prepared and in how Shariah law is interpreted.

Banks in Britain differ in their accounting operations from banks in Bahrain, for example, which in turn differ from banks in Malaysia and Indonesia.

Dey, at Clifford Chance, said the lack of standardization posed a hurdle to growth, but others said that a cookie-cutter approach was not desirable and that regional differences would remain.

"Complete standardization may not happen - there will always be variants," said Raj Maiden, managing director at Five Pillars in Singapore, who added that it was more important to tailor products according to the needs of each market.

While the debate rages on whether Islamic finance provides a safer bet or is merely a potential source of irrational exuberance, most agree the industry should make the most of the attention it is now receiving.

"If Islamic banks step up to the mark, then they will gain traction," said Testa, of Gatehouse.
Source: International Herald Tribune

http://www.islamicity.com/articles/Articles.asp?ref=IH0810-3694

[Najm]

AsSalamOAlaikum WaRehmatuAllah Wabarkatuhu

Islamic Banks Survive Financial Crunch

"Islamic banking has, thus far, remained positive, despite the current challenging global financial environment," said Zeti Akhtar. (Google)

KUALA LUMPUR — With many conventional banks crumpling and going for bankruptcy in the current global financial crunch, the booming Islamic banking industry has largely escaped the fallout.
"Islamic banking has, thus far, remained positive, despite the current challenging global financial environment," Zeti Akhtar Aziz, Malaysia Central Bank Governor, told Agence France-Presse (AFP) on Monday, October 20.

A financial crisis swept the US last month after the collapse of Lehman Brothers, the fourth-largest investment bank, and the financial woes of a number of Wall Street giants.

This triggered a domino effect across the world leaving conventional banks short of credit.

Western government have since pumped billions of dollars into their troubled banks to keep credit flowing and prevent a complete financial meltdown.

"In the current financial turmoil, it is interesting to note that Islamic financing may have prevented a majority of the mess created by the conventional banking and financial institutions," Kuwait Finance House said in a recent report.

"The outlook for Islamic financing is bright and will likely take the lead in terms of providing funding for major projects as the conventional banking system reevaluates its business model."

The rules of Islamic banking and finance read like a how-to guide on avoiding the kind of disaster that is currently gripping world markets.

Islam forbids Muslims from usury, receiving or paying interest on loans.

Transactions by Islamic banks must be backed by real assets -- not shady repackaged subprime mortgages.

Shari`ah-compliant financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.

Investors have a right to know how their funds are being used, and the sector is overseen by dedicated supervisory boards as well as the usual national regulatory authorities.

Boom

Experts, however, warn that the booming Islamic banking system could be hit if the financial turmoil worsens and real assets start to crumble.

"Islamic banks, especially in the Middle East, got heavily into private equity and real estate investments, and a lot of loans may be backed by properties," notes Jennifer Chang, a partner at Pricewaterhouse Coopers in Kuala Lumpur.

"So if the property market goes down, there will be an impact," she said.

"If a borrower is not able to pay then the bank will foreclose and the question is -- can you sell the property in the market and at what value? These are issues which all banks can face."

Abhishek Kumar, a senior research analyst at Financial Insights, a company under market research and analysis firm International Data Corp (IDC), shares the same concern but is more optimistic.

"We're not really sure what the real extent of the impact is, and whether we've passed the worst of it or not, but the extent is not going to be as bad as in the mainstream sector."

He predicts that many world countries would start taking a leaf out of the book of Islamic finance.

"More and more institutions will be interested in providing Islamic services to diversify their risk portfolio."

Islamic finance is already one of the fastest growing sectors in the global financial industry.

The Islamic banking industry, which began almost three decades ago, has made substantial growth and attracted the attention of investors and bankers across the world.

Currently, there are nearly 300 Islamic banks and financial institutions worldwide whose assets are predicted to grow to $1 trillion by 2013.

...Source...

FiAmaaniAllah

[islamirama]

Analyst fired for saying greed is bad

Fri Oct 17, 9:48 am ET

SEOUL (Reuters) – A South Korean financial researcher was fired for telling a TV talk show that people made unwise investment decisions because they were too greedy, his company said Friday.

Han Sang-choon, deputy head of Mirae Asset Investment Education Institute, said investors ignored warnings over the past few months that trouble lay ahead for stocks and held on to funds thinking a big pay day was just around the corner.

"I reckon people haven't cashed in their funds because of personal greed and expectations (of profits)," he told an investor, according to quotes from the Friday TV show that appeared widely in South Korean media.

Even though Seoul shares ended down 2.73 percent on Friday for their lowest close since late October 2005, brokerage Mirae Asset did not like the investment advice.

"Therefore, we decided to sack our deputy head, Han Sang-choon, who gave individual views out of line with our institute's original purpose, and caused concern to investors," Kang Chang-hee, the head of the company's research institute said in a written statement.

Han could not be reached for comment.

(Reporting by Kim Yeon-hee and Kim Junghyun; Writing by Jon Herskovitz; Editing by Jeremy Laurence)

http://news.yahoo.com/s/nm/20081017/od_nm/us_korea_greed_1

[islamirama]

Saudi luxury car sales strong despite global crisis

By Asma Alsharif Asma Alsharif – Tue Oct 28

JEDDAH, Saudi Arabia (Reuters) – Recession fears may be gripping much of the global economy, but in the world's largest oil exporter Saudi Arabia car manufacturers are betting on more big spending.

Traders at a luxury car exhibition in the Red Sea city of Jeddah said sales are holding up and are expected to increase in a country of 25 million, whose economy has boomed in recent years as the oil price soared to record levels.

"The luxury car market in Saudi Arabia is the biggest one in the Gulf region, so for the BMW group it is the potential market focus," said Reiner Braun, sales director at Mohamed Yousuf Naghi Motors which imports BMW and other cars.

"The global crisis will certainly have an impact on all markets worldwide but ... the Middle East will probably be the most stable (market)."

The price of oil dipped below $70 a barrel this month, 50 percent down from record levels earlier this year, raising concerns about reduced Saudi revenues. But the government is still forecasting growth for this year and 2009.

"Most of our customers in the region are not influenced by such trends," said Christian von Koenigsegg, head of Sweden's Koenigsegg Automotive, who was in Jeddah to display a car with a 1.5 million euro ($1.87 million) price tag.

"I think the market will stabilize in the next few months and this segment is hopefully kept untouched by the situation," von Koenigsegg said.

While ordinary Saudis have suffered over the past year as inflation soared to 30-year highs, the kingdom's elite have continued to prosper.

In Jeddah, Saudi Arabia's second biggest and most liberal city, the rich live fast and consumption is conspicuous.

Exhibition organizers say that Mercedes and BMW are among the most popular cars in the super-expensive range. Rolls-Royce cars were also on display in the exhibition, where colors extended to orange and lurid green.

An increasing number of young Saudis are driving brands like Lexus and Porsche. Harley Davidson motorbikes have also taken off, with clubs for aficionados in Riyadh and Jeddah.

Mamdouh Khayyat, managing director of Fast Auto Technic Co. which imports Ferrari and Maserati sports cars, said he was expecting luxury sales to hold up.
This year, the firm sold 118 Maseratis, costing at least 700,000 riyals ($186,700) each, and expects to sell 120 in 2009, he said.

Organizer Abdullah Al-Shamasi said the Saudi market will remain strong even if oil hits $40 a barrel.

"The current global crisis has an effect on exhibitions of luxury cars in Europe or the U.S. but has not affected the Gulf yet, and that's because the income level in the Gulf remains high," said Shamasi, head of conference organiser EXCS.

(Writing by Andrew Hammond; Editing by Dominic Evans and Catherine Bosley)

http://news.yahoo.com/s/nm/20081028/od_nm/us_luxury_cars_1

[Khalil_Allah]

I am not certain, but this is what I have heard about what is going on:

I have heard from this neighbor of mine that all these people were paying like $500/month on mortgages for $250k when they were making like $15/hr. I heard there are MILLIONS of people like this, and when gas went up and groceries went up, these millions started getting behind.

Either before or after all of this, Lehman's who handled a lot of this and freddie mack and fanny mae, were selling the DEBT to merrill lynch and big banks. They sold it EVEN THOUGH they knew that these people were never going to be able to pay. Then they got these debts insured by AIG, knowing that they were crappy and were going to tank.

The housing market started to plummet, the monthly payments shot up to much greater amounts and foreclosures soared. Meanwhile those who held on to their houses saw the values on the houses started to dip below the mortgage balances because everyone else was going into foreclosure and no one wanted to buy houses.

And apparently all of this started with the Clinton administration and congress at the time. They passed some legislation, apparently, that forced banks to take give loans to these people who couldn't afford them (subprime loans). As the whole balloon was about to burst, the burden was passed from company to company like a virus, and everyone who touched it got shafted.

So then the Bush administration got the opportunity to suck another 700 billion out of this country! haha everyone is freakin' out over here.:enough!:



You know it is a perfect example of why muslim economics pretty much pwn every other idea. What do people expect when they are borrowing soooooo much money????? Why are cars and houses so expensive? because people can just borrow to pay for them. And look at how many companies bought all this debt and tried to hand it off knowing that it was bad... shame.

MOST people do not own their house, but banks own houses and let people borrow EVEN MORE against their houses. It's just stupid in my opinion. Just accumulate as much stuff as you can and pay for it later. That is like playing russian roulette. BOO!