Rising risk aversion will force a flight to conservative Islamic investing, with Asia’s $20 billion Shari’ah fund market likely to be led by the Middle East, Brunei, Kazakhstan and Indonesia. Islamic finance has become popular with investors as the world financial crisis prompted some to rethink the merits of conventional banking. Shari’ah bonds and stocks have met with approval as financial market participants trade high returns for greater security. Islamic investing has to conform with the Shari’ah, which dictates that venture partners share profits and losses and investments should be ethical and avoid excessive risk. Asian Islamic, with a 10 million ringgit ($2.8 million) capital base, is 51 per cent owned by Singapore’s DBS Asset Management with the remainder owned by investment bank Hwang-DBS Malaysia Bhd. The Asian Shari’ah fund management market, which has tripled since 2002, is confident to keep rising due to demand from Muslims and the Middle Eastern petrodollars despite a recent sharp drop in energy prices. But growth would slow as the market matures. Saudi Arabia accounts for about 70 per cent of the Asian Islamic fund market while Malaysia contributes about a quarter.
SPOTLIGHT ON SHARIAH FUNDS
Rising risk aversion will force a flight to conservative Islamic investing, with Asia’s $20 billion Shari’ah fund market likely to be led by the Middle East, Brunei,
