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Green investments, financing gain traction in #Indonesia despite lack of investor awareness

The "green is the new black" sustainability trend has reached the financial world as investors are slowly turning to invest in environment, social and governance (ESG)-compliant assets in Indonesia. Rising awareness of the mounting environmental and social problems has prompted global investors to invest in sustainable assets that comply with ESG standards. Although this type of investment has been gaining popularity in the developed markets for the past several years, Indonesia seems slow in adopting the trend. For BNP Paribas Asset Management Indonesia, sustainable mutual funds only accounted for 4% of its total assets as of September 2019. The fund manager currently offers three ESG-compliant mutual fund products to its clients that adhere to sustainable and responsible investment.

Why is #Singapore so far behind #Malaysia on responsible investing?

On numerous fronts, Singapore outcompetes its regional rival Malaysia. But in terms of the sustainability of their capital markets, Malaysia trumps Singapore in responsible investing. Malaysian asset managers are more confident than their Singaporean counterparts that responsible investments will outperform regular investments. A recent Bloomberg study shows that 67% of Malaysia’s investment community believes that portfolios underpinned by environmental, social and governance (ESG) factors will perform as well as or better than regular investments. In Singapore it is 58%. The survey also found that a quarter of asset managers in Malaysia had developed their own internal ESG scoring models, compared with just 13% in Singapore. Large Malaysian asset owners are signatories to the UN Principles for Responsible Investment, whereas Singapore’s big investors are not.

London VC Hambro Perks to invest in 'two to three' Islamic startups

The UK hosted its first halal startup pitch event in mid-June, when five prominent Islamic SMEs met with investors to showcase their wares. Prominent Islamic SMEs at the 'Smart Capital Startup Pitches' event included VIP halal travel firm Serendipity Tailormade, Muslim lifestyle platform Salam Planet and halal e-commerce site OneAgrix. The event was hosted by London-based venture capital firm Hambro Perks, who plans to invest this year in "two or three" of the start-ups that featured at the pitch event. Hambro Perks managing director Ali Qaiser said rapidly growing populations in emerging markets offer ripe regions for halal technology products and services. The company made its first investment when it funded British Muslim dating app MuzMatch. Qaiser expects halal tourism to take off. He also expects to see massive growth in the 'gamification' of Islamic lifestyles, such as apps to help prayer rituals and maps for Hajj pilgrimage.

Why biblically responsible investing is gaining traction

Biblically responsible investing (BRI) is an investment decision making process that applies Christian values to issues facing shareholders and stakeholders regarding moral and social principles. Currently it represents a tiny portion of the total assets invested, but funds using BRI practises are growing exponentially. Earlier this year, Ambassador Advisors, a Sh52 billion advisory firm converted all of their assets under management to align with biblically responsible investing best practices. Similarly, the Presbyterian Church in America (PCA) has invested over 60% of its Sh41 billion fund in line with biblical standards, the Southern Baptist Convention also screens the approximately Sh1.1 trillion in its investment portfolio using BRI principles. The guiding questions are "What would Jesus do?", "Is this right and just?", "Would God be pleased?" and these questions govern the investment process.

Wahed Invest robo-adviser expands with new Islamic index funds

New York-based Wahed Invest has launched two sharia compliant index-tracking funds under its robo-adviser platform. According to CEO Junaid Wahedna, the company's goal is to make every asset class available to Muslim investors. The new equity funds launched by Wahed will track indices that are screened by Standard & Poor's. The funds have no lockup period and only charge an advisory fee rather than a management fee. Wahedna added that a recurring deposits tool has proven to be popular among clients, most of whom are first-time investors. Wahed raised $5 million in seed capital last year. The investment firm is backed by Gulf investors and venture firms including Boston-based Cue Ball Capital and Dubai-based BECO Capital.

How Lombard Odier got into the Islamic investment space

Lombard Odier has launched a full suite of Shari’ah-compliant investment solutions. Arnaud Leclercq, Limited Partner at Lombard Odier Group, said the offering began as a bespoke creation for one client six years ago, it has grown from a $10 million to in the hundreds of millions, primarily for investors in the Middle East. The investments are a mix between Sukuk and equities. Equities are chosen using a combination of MSCI’s Islamic Index and Lombard Odier’s inhouse experts. The goal is to reach $1 billion in total Islamic investment the next three to five years. Lombard Odier plans to increase its presence in the Middle East, with an office in Abu Dhabi for the coming year currently in the planning stages and a partnership with a Saudi firm currently in the works.

Shariah investments continue growth spurt in SE Asia

According to the latest Cerulli Associates research, Shariah-compliant investments are gaining further ground in Asia. Growth continues to be concentrated in South-East Asia, with Malaysia remaining at the forefront with $28.4bn in Shariah mutual fund assets under management (AUM) in 2017. Last year, Malaysia’s Securities Commission launched a five-year blueprint to grow the sector. Indonesia grew its Shariah mutual fund market by 90% to nearly $2bn in AUM in 2017. Besides allowing Shariah funds to fully invest overseas, market regulator Otoritas Jasa Keuangan (OJK) recently introduced a framework requiring fund managers to carve out dedicated units to manage existing Shariah funds. The Cerulli survey shows that asset managers in the country expect demand for Shariah investments to come mostly from insurers and pensions over the next few years.

Lombard Odier launches Shari'ah-compliant #investment offering

Lombard Odier has launched a full suite of Shari'ah-compliant investment solutions. Arnaud Leclercq, Limited Partner at Lombard Odier Group said that since the offering began as a bespoke creation for one client, it has grown from a $10 million to in the hundreds of millions, primarily for investors in the Middle East. Lombard Odier's Islamic investments have averaged 4-5% returns since 2012. The goal is to reach $1 billion in total Islamic investment the next 3-5 years. The investments are a mix between Sukuk and equities. Equities are chosen using a combination of MSCI's Islamic Index and Lombard Odier's in-house experts. The clients serviced with these solutions are primarily from the UAE, Saudi Arabia, and Kuwait. Lombard Odier plans to increase its presence in the Middle East with an office in Abu Dhabi.

Sharia-compliant #investments guard against foreign influence

Sharia-compliant investments have flourished in recent years, which could help strengthen the domestic market’s resistance to global influences. Data from the Indonesia Stock Exchange (IDX) shows that the number of sharia-compliant investors in March grew 18%, or by 4,245 investors year-to-date (ytd), with transactions totaling Rp 476 billion.

Gotta Have Faith: A Biblically Responsible #Investment Strategy

There are several ways for financial advisors to diversify an investment portfolio. For example, the James Biblically Responsible Investment ETF (JBRI) tries to reflect the performance of the James Biblically Responsible Investment Index. Indexing methodology screens out or excludes companies engaged in activities that are objectionable from a biblical perspective. This type of indexing methodology is a subset of the broader socially responsible investing branch of investments where investors try to achieve profitable investment goals while still adhering to one's principles. According to James Investment Research, JBRI is constructing a portfolio comprised of the most attractive stocks meeting Christian principles and criteria. The fund can be used as a core equity holding, an ESG option, or as a Smart Beta holding.

Call for Good Practices on Islamic Finance and Impact Investing Activities

Click here to apply http://bit.ly/2tN5RAZ

Purpose of this call is to invite private and public sector to share their good practices on
•Islamic finance funded impact investments and dedicated vehicles
•impact investment vehicles in the OIC region
•Islamic social finance vehicles

for the mapping study that is being carried out under the Global Islamic Finance and Impact Investing Platform (GIFIIP). The selected cases will be analysed by the research team managed by IICPSD and IRTI. Subsequently the good practices, information on vehicles and further findings will be published as part of the study.

Investment Focus

World's largest single country Islamic ETF launched on QSE

#Qatar launched the world's largest single country Islamic exchange traded fund (ETF). Al Rayan Qatar ETF (QATR), sponsored by Masraf Al Rayan, is planning to create more units to meet the increasing demand. The QATR is listed on the Qatar Stock Exchange and seeks to track the performance of the QE Al Rayan Islamic Index to provide investors diversified exposure to Qatari equities. The open-ended fund, with initial assets of $120mn, is three times larger than any other ETF in Qatar and Gulf region and has pegged total expense ratio at 0.5% of net asset value, which is considered to be the lowest for any single country ETF in the region. According to Al Rayan's chief investment officer Haithem Katerji, QATR is perfect for investors seeking diversified exposure to Shariah-compliant Qatari stocks with the simplicity and efficiency of buying just one share.

#Qatar’s first Shariah compliant ETF to hit market tomorrow

Qatar’s second listed exchange traded fund (ETF), the Al Rayan Qatar ETF will begin trading tomorrow on Qatar Stock Exchange (QSE). Al Rayan Qatar ETF is the first Shariah-compliant exchange traded fund listed on QSE.
The ETF, issued by Masraf Al Rayan, will track the QE Al Rayan Islamic Index. The Fund will track the performances of 18 stock index of Sharia-compliant Qatari listed equities. Al Rayan Investment is the Fund Manager. HSBC Bank Middle East is the Investment Custodian. According to the prospectus issued by the Fund Manager, the Fund is structured as an open-ended vehicle with a maximum limit of issued capital of QR2bn. The base currency of the Fund is Qatari Riyal and the Fund will only invest in securities denominated in Qatari Riyal.

Project Ar-Rahn 2 listing oversubscribed

Muamalat Venture, a wholly owned subsidiary of Bank Muamalat Malaysia had a second listing on Malaysia's Investment Account Platform. The investment book was oversubscribed by more than 1.05 times on the first day of its listing. Project Ar-Rahn 2 is an investment in a share of aggregate capital contribution of Muamalat Venture under the musharakah joint venture with Permodalan Kelantan, in selected branches of Islamic pawn broking (Ar-Rahn) business activities. The investment of RM20 million in Project Ar-Rahn 2 is for a tenure of one year and expected to generate a return of 7% per annum for investors.

BankIslami launches Shariah-compliant CP of Rs1.5b

BankIslami Pakistan has launched the country's First Shariah Compliant Commercial Paper (CP) Issue worth Rs1.5 billion for Hascol Petroleum. Hascol is Pakistan’s second largest Oil Marketing Company (OMC) in terms of volume managed through its more than 140,000 MT of oil storages and 498 retail outlets. BankIslami Pakistan acted as Mandated Lead Arranger & Advisor, Issuing & Paying Agent and Investment Agent for this CP Issue which was structured based on the Bai Salam cum Wakala model. The CP issue was oversubscribed by more than 80% of the issue size. The introduction of Shariah Compliant Commercial Paper is aimed to broaden avenues for Mutual Funds and other Institutional investors to invest in short-term/fixed income instruments in a Shariah-compliant manner.

Investor appetite for Gulf Arab bonds remains high: experts

The market for Gulf Arab bonds and Sukuk achieved an all-time high issuance of 70 billion U.S. dollars in 2017, with sustained investor appetite expected in 2018. A recent study titled "The GCC (Gulf Co-operation Council) Fixed Income Market: Then and Now," said that 70% of all debt and Sukuk issuances were from sovereigns, while 30% were from corporations. The study was conducted by Emirates NBD and Swiss portfolio management firm Fisch Asset Management. Regarding the outlook for 2018, increased debt issuance could continue in the region despite elevated geopolitical instability. According to Usman Ahmed, Head of Investments at Emirates NBD, growth of the GCC's debt investor base is expected to continue in 2018, with demand coming from the record inflows to emerging markets and supply provided by the diversification needs of the region.

Responsible investing: ESG factors set to alter the #investment landscape

Environmental, social and corporate governance (ESG) and sustainable investing (SI) are central topics for policymakers, institutional investors and corporates. According to a 2017 study by BNP Paribas, 46% of asset owners plan to have 50% or more of their investments in funds that incorporate ESG or responsible investing. Investors are increasingly investing based on the ESG profiles of the investee companies and using green, sustainable bonds (52%). Asia-Pacific investors are leapfrogging their regional counterparts. Despite the positive developments, there is still much work to do and challenges to overcome. A lack of robust ESG data is the biggest issue for asset owners and asset managers. The biggest reason why ESG is not part of investment decision-making today is a lack of clarity over how to define it. In November 2017, the European Investment Bank and the China Green Finance Committee presented a project to facilitate the establishment of a common language in green finance.

The First Investor acquires another #German asset

The First Investor (TFI) Qatar, a subsidiary of Barwa Bank Group has acquired a new office building in Frankfurt. The asset is another unique blend to TFI Euro Income Fund, which was launched in 2017 with sharia compliant stature. Europe continues to provide excellent investment and business environments given low inflation and low interest rate regime. TFI is keen to pursue its investment strategy with the aim to help clients achieve their objectives in a very challenging business environment. By that, TFI will soon launch another UK Income Fund and a US Income Fund together with many investment opportunities during 2018.

The new #investment trend: Islamic ETFs

The growing popularity of Islamic finance has led to the constant development of new Shariah-compliant investment products. Most of those products have been developed and popularised in Malaysia. Islamic Exchange Traded Funds, or Islamic ETFs have become increasingly popular among both institutional and retail investors globally. They have low management costs, high liquidity, relative safety and solid appreciation potential as a mid- to long-term investment. The main difference from conventional ETFs is that Islamic ETFs track only benchmark indices that consist of Shariah-compliant stocks or assets. An Islamic ETF is managed strictly under Shariah principles and overseen by an appointed Shariah committee. This naturally increases costs and results in higher fees compared to conventional ETFs. To tap the huge potential, Islamic ETFs need to be made cost-effective and get incentivised by governments to attract both institutional and retail investors. In the Gulf Cooperation Council (GCC) countries ETF is relatively new. In the GCC more promotion is needed to bring Islamic ETFs out of their niche.

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