Global Islamic assets hit $1.3 tln in 2011

Islamic funds reached $58 bln, a new high

* Islamic assets represent 1 pct of global market

By Anjuli Davies

LONDON, March 29 (Reuters) - Islamic financial assets around the world hit $1.3 trillion in 2011, a 150 percent increase over five years as the industry expands into new country's beyond core markets in the Middle East and Malaysia, a report on Thursday estimated. Learn more The Stability of Islamic Finance: Creating a Resilient Financial Environment for a Secure Future (Wiley Finance)

Developed markets in Malaysia, Iran and the Gulf remain fertile ground for future growth, but considerable potential also exists for expansion as more countries look to cultivate Islamic banking operations, including Australia, Azerbaijan, Nigeria and Russia, the report by lobby group TheCityUK's UK Islamic Finance Secretariat (UKIFS) said.
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The figures were based on UKIFS growth estimates projected on end-2010 figures from a survey of the top 500 Islamic Financial Institutions conducted by The Banker publication.

"Considerable potential exists for expansion of the industry worldwide, although appropriate legal and regulatory structures are crucial for its development in individual countries," the report noted.

Morocco is also looking to launch its first fully-fledged Islamic bank in 2013, Reuters reported on Monday

A lack of global standardisation among Islamic institutions has been one of the main challenges for the Islamic finance industry. While regulatory bodies such as AAOIFI in Bahrain and IFSB in Malaysia have attempted to provide standards for sharia-compliant transactions, they are guidelines rather than enforceable rules.

The long-term impact of the Arab spring uprisings as new countries open up to Islamic finance remains to be seen and any further spread of political unrest could negatively affect prospects in some Middle Eastern countries, the report said.

Egypt, for instance, has raised the possibility of issuing a sovereign sukuk (Islamic bond), while Tunisia has set up a working group that will study how to develop Islamic finance in the country.Learn more Risk Analysis for Islamic Banks

Sukuk issuance globally increased 62 percent to $84 billion in 2011, with Malaysia accounting for two thirds of that.

Islamic funds under management reached a high of $58 billion in 2010, with the available pool about 10 times larger at over $500 billion, the report found. Fierce competition, though, has driven down management fees worldwide from 1.5 percent in 2006 to 1 percent in 2011.

The new figures are higher than those predicted by Ernst and Young in a report in November, in which the consultancy estimated Islamic finance assets could climb 33 percent from 2010 levels to $1.1 trillion by the end of 2012.

Islamic assets represent only around 1 percent of the global financial market.

UKIFS is a wholly-owned subsidiary of TheCITYUK, a lobby group composed of members across the financial services sector, including lawyers, bankers and asset managers.
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Source : Reuter.com
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Opec agrees record oil output cut

Chekib Khelil, president of Opec

A record cut in oil output of two million barrels a day has been announced by the Organisation of Petroleum Exporting Countries (Opec).
The cut, which is Opec's largest ever, was agreed on Wednesday following a meeting of the organisation's ministers in the Algerian city of Oran.

The reduction in output will mean that Opec is taking 4.2 million barrels of oil out of the global market per day compared to September levels.
"I hope we surprised you," Chekib Khelil, president of Opec, said when asked whether the size of the cut would push oil markets into an upward trend.
"If you're not surprised we need to do something about it," he said.
However, the markets failed to immediately rally and the price of crude oil actually sank to $40.20 following the announcement, the lowest level since the summer of 2004.

Investors cautious

The failure to restore market confidence is a clear indication that investors remain cautious that the world is in for a long, painful recession during which energy use will continue to fall.
There had also been earlier speculation the cut could be combined with a reduction of 600,000 barrels a day by non-Opec members Russia and Azerbaijan.
However, Moscow is reported to have distanced itself from direct ties with the 13-nation producers' group, dampening hopes of further coordinated production cuts.

Although Igor Sechin, the Russian deputy prime minister, and Natik Aliev, the Azeri energy minister, announced the 600,000 barrel cut, their reductions appeared to be largely symbolic.
Russia indicated its reduction had already been implemented back in November, while Azerbaijan said its output had been reduced by a third because of production problems earlier in the year.

Falling demand

Ali al-Nuaimi, the Saudi oil minister, said: "We also hope that other producers who are not in Opec will chip in for the purpose of bringing stability to the market."
Oil demand has dwindled in recession-hit industrialised nations, and the cut was endorsed by many of the group before the meeting in an attempt to stabilise the price.
"If unchecked, prices could fall to levels which would place in jeopardy the investments required to guarantee adequate energy supplies in the medium to long term," a statement released by Opec said.
An overall reduction of 2.6 million barrels per day would remove about three per cent of the world's daily output.
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Oil cut is 'necessary'

Chekib Khelil, Opec's president, said that the $75 a barrel price target set by King Abdullah, Saudi Arabia's monarch, was a "fair price".
Saadallah al-Fathi, an oil analyst based in Dubai, told Al Jazeera: "Raising oil prices will impact a lot of people in the oil-producing countries and make it possible for them to continue with their development and with their investment in the oil industry to provide more oil for the world in the future.
"At the same time they have to be cognisant of the state of the economy in the world, and they have to help the world in getting out of the recession."

Asked if he thought $75 a barrel was a fair price for oil, he said: "If the price of oil reached $147 per barrel, I think $75 per barrel seems to be a fair price."
Opec has cut output twice since September without halting the decline in oil prices which has slashed revenues for the group's members and raised fears of a future supply crunch as investors pull money from costly exploration and production projects.

Source : Al Jazeera