Islamic Investment: Atypical Features & Gains



In foreign investment market news, Chile is pursuing expertise for breaking into the Brunei market via Islamic banking expertise. According to the news from The Brunei Times, Chile’s non-resident ambassador to Brunei, Christian Rehren, is exploring every avenue to bridge un-conventional banking ties with the Sultanate. Linkages such as the Latin America to Middle East bridge indicated, reflect well on growing markets for 2015. Here’s some interesting investment news from very positive markets.

Mohammed bin Rashid Al Maktoum Business Awards

Mohammed bin Rashid Al Maktoum Business Awards


Following the Islamic Money

While Islamic financial institutions are typically huddled within Middle Eastern and Southeast Asian capitals, recent expansions in Africa and Latin America have created new avenues for entrepreneurs and investors. Much needed financing of Latin American and other projects are looking at the potential for $1 trillion Islamic finance market dollars or more in alternative capital.

The Global Islamic Finance Report predicts that by 2020, Brunei will be one of the leading banking and financing centers for these alternative funding needs. Brunei’s bid for filling the void is not the only Islamic capital overture, however. News that Maisarah Islamic Banking Services of Bank Dhofar signed into a Wakalah agreement with Shariah compliant Bank Nizwa, is indicative of that local market expanding too. The bank’s latest investment in the The Wave Plaza” hotel project with Taameer Investment depicts the typical expansion for players in the region. Where capital exists, creative financing for atypical gain seems to emerge.

Clearly last year’s visit to Latin America by UAE official delegation visit to Latin America, headed by H.H. Sheikh Mohammed bin Rashid Al Maktoum, was a prime indicator of Islamic banking’s strategic outlook. The flow of capital to Latin and Central America from the Middle East is not only representative of new creative financing though. The chart below from the Dubai Chamber shows the trade balance in between Mexico and the UAE. Interestingly, Brazil imports far less than the UAE imports from them.

Brazil bilateral trade with UAE - Source Comtrade

Brazil bilateral trade with UAE – Source Comtrade

Ancillary Investment Factorials

Key figures from the Middle East are on the move expanding horizons in South America. Abdulrahman Saif Al Ghurair, chairman of Dubai Chamber of Commerce and Industry, is looking for office branches in the region, and especially in Peru. In the Summer of 2013 the so-called the InPeru initiative saw more than 40 such players gather to discuss not just petroleum business, but everything from mining to food production and retail.

Back in 2011 The Economist Intelligence Unit released a report on investment flows to and from The Gulf Co-operation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates). In this report substantial ties in between the GCC and Latin America are cemented via the logical energy interactions, but more interestingly based on the Gulf States’ food security deficit. In this instance we find perhaps the most potent “need based” investment synergy. The long and short here being, Islamic investors are putting money into Latin American companies rather than buying up resources there. (ref: Latin American & the Caribbean pg. 21). I mention this aspect for obvious reasons. Incentive wise, the vast resources of the GCC nations investment wise, bear striking “influence” modifiers. More on this in another piece later on, but for now it’s important to note markets where positive growth like this occurs.

Typical investing via such entities as Banco Santander Brasil by GCC and individual monied investors tends to break ground for less customary investment scenarios, and it is in this area the newest potential arises. It is here that real estate and other markets could see the most gains this year. As to the “why” of this, please refer to Venezuela and the crash of that currency recently. Dollars can now buy a lot of property compared to just a year ago, and not only in Venezuela. Then too, development projects on that continent would seem prime for GCC capital to glean dividends from. This remains to be seen, but the possibility is striking. Barron’s labelled Argentina the “Best 2014 Emerging Debt Investment, After Turkey.”

This is a region we’ll continue to follow…

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