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Michael Saleh Gassner
The Shariah-focused independent wealth organisation Mahal Thqa has opened in Dubai. The firm is a joint venture between Middle Eastern financial consultants Mondial and US-based venture capital organisation Shariah Capital. It will be lead by chief executive Sadi Hassouneh and will focus on the Middle East’s Arabic-speaking population offering Islamic investment solutions and fund alternatives. Thqa’s investment approach will be based on protecting and growing its client’s capital over the medium-to-long-term and seeks to avoid the “boom-and-bust” results associated with specific asset class risk.
For many years we see in the media experts believing in inflation and even hyper inflation. However, in the same time we face proponents warning against deflation. So far we all noticed.
Only a about a week ago I read an article by Myret Zaki clarifying that unfortunately inflation and deflation co-exists.
Myret Zaki's thesis is that we face inflation on financial markets, and deflation in the real economy (in French):
In my view there is a general major shift in the price matrix and I still try to figure the magnitude and implications thereof. It is a bit irritating as at University we learned about neutrality of money:
This means any extra supply will increase prices equally, 5 % more money, all prices going up 5 %. Pretty plausible at first hand. However, it seems it does not work in reality any more (or never did).
Emirates Islamic Bank has launched a four year Wakala investment option for customers, with an expected profit rate of 2.57 per cent per annum. Available on investment amounts ranging from AED 100,000 to AED 5 million, Emirates Islamic Bank’s latest product closely follows the launch of the three-year special Ramadan Wakala, introduced earlier this year. The four year Wakala investment option differs from conventional Wakala investments, with the profits being paid out on an annual basis to customers. Faisal Aqil, the bank's Deputy CEO - Consumer Wealth Management, said that customers are encouraged to develop a culture of saving through the launch of the bank's Sharia-compliant savings products.
IslamicFinance.de is still edited by myself, Michael Saleh Gassner. In the same time the website became part of the family's publishing house, Al Kitab.
Myself I moved to Geneva for professional reasons, working as Islamic private banker. IslamicFinance.de remains to be a private passion.
Kuwait Finance House KFH Wealth Management General Manager Matthew Welch stated that reinforcing the Bank's private banking and wealth management service is a key pillar of the restructuring and transformation plan that the Bank is presently implementing. Matthew noted the rising competition in the high net worth segment and that clients are increasingly discerning in selecting the institution with whom they choose to invest. He explained that KFH is keen on harnessing the investment capabilities of the wider KFH group to bring new opportunities and investment ideas for the benefit of the Bank's high net worth client base. In addition, he noted that clients now expect increased access to investment advisory and discretionary management services to help them navigate the present volatile market conditions.
A more systematic endowment management would enhance the strength and potential of Muslims to use their wealth to help the community. The administration of endowment property ought to be conducted in a professional manner to protect its value for the benefit of the Muslim community. It could be done by setting up a special organisation, instead of the current practise of having these properties managed temporarily by various Islamic welfare bodies. The administration of endowment property would need to be re-examined in line with the global economic context to fully maximise its value and to avoid deterioration.
The Securities Commission (SC) aims to position Malaysia as an Islamic wealth management centre, a target that is highly feasible because of the country's high savings rate. Steps are being taken to create a certain number of intermediaries in the area. As of July 2013, there were 19 licensed Islamic fund management companies in Malaysia. The country's assets under management of Islamic funds are expected to hit RM322 billion by 2020 from RM80 billion end-2012. Generating broader approach with regional countries can help Malaysia to continue innovating and expanding the Islamic market place.
A majority of high net worth individuals (HNWIs) in the Middle East believe wealth creation is faster today than in the past, according to the latest report of Barclays Wealth Insights. Over half (60%) of respondents in the Middle East agreed that wealth can be created faster today than in the past, in comparison to 43 per cent in Europe and 31 per cent in North America. Interestingly, more than half (54%) of Middle Eastern respondents stated that personal investments have contributed largely to their overall wealth portfolio, compared to other sources of income such as inheritance at 49 per cent. In terms of how this wealth is used, HNWIs in the Middle East have a tendency to allocate more of their resources to personal property than to tangible assets and collectibles. Many HNWIs around the world now prefer to give their money to family and friends and charitable causes in their lifetime rather than as inheritance, the report revealed.
Crescent Wealth has developed its own platform for its four investment options and has appointed Corporate Combined Superannuation (CCSL) as trustee. The Shariah-compliant funds - Australian equities, international equities, income fund and Australian infrastructure and property - were previously only available on the Association of Independently Owned Financial Planners Personal Choice Private e-wrap platform, after they were launched late last year. The company is also in talks with industry super funds to white-label the product as an ultra-ethical investment option. Although the product follows Islamic finance principles, the company expects the majority of its clients to be attracted to its ultra-ethical investing philosophy
Malaysia Minister of Finance II Y.B. Dato' Seri Ahmad Husni Mohamad Hanadzlah launched "Labuan IBFC Wealth Management Year 2013". He said Labuan IBFC has grown in the last two years, from 2010 to 2012. The total value of assets for banking and leasing sectors, as well as insurance premiums collected by Labuan IBFC licensed institutions, in aggregate grew to USD76.2 billion or RM236.3 billion. This represents an average annual growth of 13.5%. Moreover, the Asian Development Bank recommended LIBFC Foundation as the holding entity to domicile the USD485 million ASEAN Infrastructure Fund in Labuan last year. For the future, the introduction of a broad range of capital market products needs to be facilitated. Furthermore, a competitive investment management industry has to be established.
Faced with lean pickings, savers are advised to review their options wisely. One way to make cash generate the best return is exploring the available accounts and the interests paid, including e-saver accounts and certificates of deposits. Moreover, debts should be paid off in order not to spend on high interests. Some banks also offer special savings schemes or award prizes, that can help to increase the wealth. Last but not least, looking overseas for high interest rates can be a good option, but currency risk and conversion charges need to be considered here.
Islamic finance had another great year. Many of its market segments progressed, like for example the Sukuk market gaining more maturity. Despite the ongoing debt crisis a good sign of hope and happiness.
Nevertheless we are - as an industry - still not satisfied with the achievements. Islamic finance shall grow stronger in terms of social impact and in terms of substance:
Hence, please allow me to re-iterate my call for participating in international initiatives beyond just our own industry to learn and spread knowledge and experience:
Calling Islamic financial institutions to become member of the United Nations Finance Initiative
Inshallah we see more Islamic financial institutions taking a lead in SRI, Social Impact Investing and other approaches while contributing with Islamic finance knowdledge to the conventional industry. The time is now; and there are signs that Malaysia aims for a lead:
According to the 2012 National Bonds GCC Savings Index, Bahrain nationals has experienced the biggest increase of savings sentiment while Qatari nationals savings sentiment has darken. E.g Kuwait interviewees had admitted that their savings are less than they had originally planned at 78%. You can find more statistics here.
The next area Islamic finance sets as a goal to develop is wealth management. So far, Muslim high net worth individuals have very limited possibilities in terms of availability of suitable products and services. According to consumer banking global head of Standard Chartered Saadiq, Wasim Saifi, the Gulf region in particular has accumulated a lot of wealth in the conventional space. Provided that customers are offered a Sharia-compliant option that can provide them with a diversity of risk and manage it properly, their wealth would be able to move into the Islamic space.
According to a recent report by KFH-Research, one million wealthy families in the Gulf region are in possession of investment assets worth about USD 1.2 trillion. The report further informs that the world's population of high net worth individuals (HNWIs) grew by a marginal 0.8% year on year to 11 million in 2011. In comparison to growth rates of 17.1% in 2009 and 8.3% in 2010, last year's growth is considered rather sluggish. There is also a decline in the aggregate financial wealth of these HNWIs as high as 1.7% to USD 42 trillion in 2011. The main reason for this is believed to be the challenging global macroeconomic conditions and volatile global financial markets.
The German language book on Islamic finance by the Editor of IslamicFinance.de and Dr Wackerbeck from Booz Consultants is now translated to Chinese.
Please find the biographical information below:
Authors: Michael Gassner / Philipp Wackerbeck
Title: Islamic Finance – Islam-gerechte Finanzanlagen und
ISBN number: 978-7-5139-0217-5
PUBLISHER: Beijing - Democracy and Construction Press
Pre-Publication Date: 2012.7
Full biographical details: http://db.lib.bua.edu.cn/asord/asorditem.php?asord_marc_no=0001344540
Book review about the German language original: http://www.rpi-virtuell.net/workspace/24686AD5-936C-476D-9EA0-65E2968590...
IslamicFinance.de offers an overview about new job openings of October 2012 herewith - firms aiming to be included please send a job profile/hyperlink to email@example.com - the full details of the advert has to be accessed by the hyperlink below the brief description:
Product Manager, Islamic Banking
Standard Chartered Bank - United Arab Emirates-SCB (United Arab Emirates)
?Development of Islamic wealth products across CBMS, insurance and investment streams to create customer value proposition.
?Ensure successful implementation of the Islamic banking strategy across high value segment.
?Concentrated responsibility to work with the Priority/Wealth/Private/SME product/frontline teams and support functions to build on the current Islamic banking capabilities and to create seamless customer experience
?Act as a product specialist for RMs on client meetings to introduce and explain the Saadiq solutions to meet their needs
?Financial budgeting and business forecast. Evaluation of financial performance.
The home to most millionaires in the world changes from the US to the Asia-Pacific region. Already the millionaire population in the Middle East is 2.7% higher with 450,000. Wealth rose 0.7%, thus reaching $1.7 trillion. This information given by Capgemini and RBC Wealth Management is an indication of growth of the investable wealth of the region's high net worth individuals independent from the Middle East's vulnerability to protests and demonstrations.
According to CTPartners, a huge number of family-owned businesses, which now have expanded into regional and global conglomerates, are concerned with succession planning to manage and preserve their wealth for future generations. Family-owned businesses should ensure sustainability beyond the founding fathers and their immediate offspring. Since these businesses constitute 75% of the private sector economy, their sustainability is essential for their contries as well.