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Friday, October 31, 2008

New Sharia products in Asia sought

The booming Islamic finance industry has yet to rub off on wealthy Asians who say there are far too few Sharia products to invest in, the private banking arm of Malaysia's second largest lender said yesterday.
Sharia investing is a key pillar in the Middle East and has caught the interest of non-traditional centres such as London and Singapore, but rich Asians are still cool on it.
Asia is a big potential market for the $1 trillion Islamic finance sector, with the Asia-Pacific home to 28 per cent of the world's high-net-worth-individuals, who are defined as those with investible assets of more than $1 million.
Even in Malaysia, which has the world's largest Sharia bond market, wealthy individuals have limited interest in Islamic assets.
"The appetite is still quite small because they continue to nibble," said CIMB Private Banking co-head Carolyn Leng.
The bank says it is Malaysia's top private banking firm with assets of 4.4 billion ringgit ($1.23bn). The bank expects to increase this to about 7bn ringgit by 2010, Leng said.
"Offering of Islamic products are not that great here, what you have is probably what the market (outside) has as well. Product innovation is key, we need to be a lot more creative."
Structured products and Islamic bonds are the main sharia products that wealthy Malaysians put their money into, Leng said.
In contrast to Asia, Middle East investors have a wider choice of Islamic offerings as banks tap their global resources to structure innovative products, Leng said.
"There are a lot of derivatives-based kind of products. The way they structure some options into their products is interesting because it's done in such a way that it's a profit-sharing method," she said.
Islamic banking products can be bought and sold by all investors, regardless of individual religious belief, and is premised on the notion of ethical investing.
Islamic banks have been barely bruised by the global financial crisis, although falling property and commodity prices and slowing economies are starting to affect the sector.
Source : Gulf Daily News

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