IFN Weekly market roundup: 16th-22nd June 2018

Date: Jun 2018

Daily Cover

The Islamic finance and banking market is back on a roll after slowing down during Ramadan and the short Eid break. Here are the top news you need to know for this week: 

Saudi joins MSCI Emerging Markets Index 

In a major step expected to boost international interest in the Saudi stock market, MSCI included the MSCI Saudi Arabia Index into the MSCI Emerging Markets Index.

“The inclusion of Saudi stocks in the MSCI Emerging Markets Index will facilitate investors’ accessibility to the local stock market and will attract foreign investments into Saudi Arabia. International asset owners managing passive investment strategies in the emerging market space will see their investment universe broadened. US$1.9 trillion in assets are currently benchmarked to the MSCI Emerging Markets Index suite,” said Vanessa Robert, a vice-president and senior credit officer at Moody’s Investors Service. 

Franklin Templeton is one of the 140 foreign investment firms granted qualified foreign investor status by the Saudi Capital Market Authority, allowing the firm to invest directly in Saudi Arabia’s US$442 billion stock market by leveraging on Saudi’s inclusion on the MSCI Index, which is projected to bring in approximately US$35 billion in additional investment flow. 

Qatar’s merger aspirations 

After more than a year in discussion, Qatar’s tripartite bank merger plan fell through this week. Masraf Al Rayan, Barwa Bank and International Bank of Qatar (IBQ) announced that the negotiations on the proposed merger between the three banks have ended, despite garnering the support of the central bank governor. But not all is lost, as two of the banks, Barwa Bank and IBQ, are in advanced merger negotiations, with talks expected to be concluded as early as next week, according to Reuters quoting unnamed sources. 

Separately, Qatar Financial Markets Authority gave its final approval on the merger plan for Dlala Islamic Brokerage and Dlala Brokerage. 

New governor of Bank Negara Malaysia appointed 

Nor Shamsiah Mohd Yunus, a former deputy governor of Bank Negara Malaysia, has been appointed to head the central bank. Shamsiah will be replacing Muhammad Ibrahim as the governor, who resigned earlier this month amid investigations into 1MDB, just two years after he took up the position. 

Post-Ramadan Sukuk buzz

The UAE led the corporate Sukuk market this week. Gulf Navigation received the consent of its board of directors to issue a senior unsecured mandatory convertible Sukuk facility via private placement, whereas the Securities and Commodities Authority is in talks with a local institution to issue retail Sukuk papers with minimum investment values expected to range from AED10 (US$2.72) to AED20 (US$5.44), according to Al Ittihad, a local news portal, citing Dr Obaid Al Zaabi, CEO of the SCA. 

FCI introduces Islamic factoring 

FCI, a global representative body for factoring and financing of open account domestic and international trade receivables, included Shariah compliant factoringas part of its supported business finance solutions, opening a wide array of opportunities for the Islamic trade finance market. Following this, the amendments to the General Rules of International Factoring will be done by a working group consisting of FCI’s Legal Committee, Noor Bank and the International Islamic Trade Finance Corporation. 

Launch of Iran’s first cinema VC fund postponed 

IFN has learned that Farabi Cinema Foundation’s venture capital (VC) fund has been postponed. The initiative, expected to be launched in June 2018, was intended to fund the production of movies and the construction of cinemas. 

Uganda to implement Islamic banking in October 

Uganda is set to follow the footsteps of other African nations in tapping the Islamic finance industry with its Islamic banking framework finally ready to be implemented and to be operational in October this year, according to the Daily Monitor quoting Patrick Ocailap, the deputy secretary of the Treasury. Despite the parliament passing an amendment to the Financial Institutions Act to accommodate Islamic banking in 2016 and introducing the Financial Institutions (Islamic Banking) Regulations 2018 in February this year, a lack of guidelines and material progress since then has delayed the operation of Islamic banking in the country. 

Coris Bank opens window in Senegal 

Coris Bank International, headquartered in Burkina Faso, expanded to Senegal with an Islamic window recently. The window, which is named Coris Bank Baraka Senegal, is facilitated by the Islamic Corporation for the Development of the Private Sector (ICD) as the technical advisor. The bank is on an expansion spree, having already opened Islamic windows in Mali and Benin, and it is planning to open another one in Ivory Coast by the end of this month. 

International interest for Zitouna sale 

Tunisia’s Al Karama Holdings received bids from three consortiums and four stand-alone companies from various industries and geographical regions including Africa, Europe, the Middle East and Southeast Asia for the acquisition of its 69.15% stake in Banque Zitouna and 70% stake in Zitouna Takaful. Two consortiums consist of Islamic financial institutions, among others; and two out of four individual bidders run Islamic banking businesses. 

Pakistan establishes new rules for employees’ provident and contributory funds 

Pakistan is poised to widen investment opportunities of employees’ provident and contributory funds by, among others, including ‘A’-rated bonds, redeemable capital, debt securities or similar instruments for investments under the new Employee’s Contributory Funds (Investment in Listed Securities) Regulations 2018. The Securities and Exchange Commission of Pakistan also introduced three new asset classes, namely money, debt and equity markets under the rules.

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