Islamic finance market worth $500 billion grows up to 15 percent a year

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DUBAI: The director of Dow Jones Islamic Index Group has said the Islamic finance market valued at $500 billion was edging up at an annualized growth rate of 10-15 percent, arguing that Islamic indexes had outperformed regional stock markets.

Speaking to Al-Khaleej, A. Rushdi Siddiqui maintained that concerted efforts from all players were necessary in order to maximise benefits from ample liquidity in the Islamic World.

Siddiqui praised the performance of Islamic indexes in 2006 saying much of this was due to the fact that 60 percent of listed firms under the index operated in three main areas, namely the oil & gas, healthcare and technology domains.

He explained these sectors witnessed exponential growth in profits last year thanks to soaring oil prices, sending the Global Islamic Index surging 15 percent, the Islamic Emerging Markets Index 24 percent and the Asian index by 12.75 percent.

In the meantime, all composites under the Dow Jones Islamic Indexes variably climbed last year while Gulf Cooperation Council (GCC) stock market indexes unequivocally receded, with the Muscat Securities Market being the sole exception.

Responding to a question on the means to promote the concept of Islamic finance, Siddiqui urged consolidated efforts and increased coordination from all stakeholders to educate the public on the merits of Islamic funding. He emphasized that the main hurdles hampering the industry today were the lack of qualified staff and expert jurisprudents on Islamic banking and finance.

The money market expert referred to a study by A.T. Kearney that forecast 30,000 job openings in the Islamic finance sector over the next decade. The same study also warned that Islamic finance may threaten traditional financing, or possibly even override it.

The Dow Jones Islamic indexes were launched in 1999 in Bahrain as the first Sharia-compliant investment standard indicators in the world. Today there are 60 indexes. Corporate listings under these indexes dictate that listed firms operate in Halal (permissible in Islam) activities and do not invest capital in areas such as the alcohol, tobacco or the arms industries or trade with commercial banks.

These indices also include the Dow Jones Citigroup Sukuk Index which debuted in April last year gauging the performance of Islamic debentures issued by banks and financial institutions incorporated in the index. This index is devoted to enacting Sharia-compliant investment opportunities.

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