Not dollar, not euro, but gold

As the US dollar’s value continues to drop, China looks to invest in gold for stability.

Growing concerns about the slow death of the dollar rather than a saviour’s goodwill are underpinning China’s widely publicised purchases of European government debt, according to experts. But as the Eurozone debt crisis spreads from Greece and Portugal to countries like Italy and threatens the very survival of the euro, China’s finance mandarins and keepers of the country’s 3 trillion dollars foreign reserves are looking yet again at gold as the anchor of stability.

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Yu Yongding, a former adviser to the Central Bank of China and strong critic of US treasury bonds, an asset in which about 1.2 trillion dollars of China’s foreign reserves are invested, has been calling on Chinese rulers to diversify as much as possible of China’s holdings to guard against a weaker dollar.  Continue reading

Is Islamic Finance the new challenge to Wall Street?

I was in Kuala Lumpur in October attending the Global Islamic Finance Forum, organized by Bank Negara Malaysia and the Malaysian International Islamic Finance Centre. The whole glitterati of the Islamic world was here, and coincidentally, the HSBC Asia Board also held their meeting here, so it was also good time to catch up with all the Hong Kong good and great, including the incoming taipans at the Bank.

In the 1990s, Islamic finance was a fledgling fringe industry. But today, its size has grown from roughly US$150 billion to about US$1 trillion in size. This is of course still small relative to some of the largest global fund managers and universal banks, who manage more than US$1 trillion each. But the double-digit growth and potential size of the market cannot be ignored. Some pundits think that the market size will reach US$2 trillion within the next five years.

There are roughly 1.3 billion Muslims in the world, with 138 million in India and roughly 30 million in China. These are growing markets in terms of income and wealth. As the Muslim community seeks to invest in interest-free banking, Islamic funds have been growing in leaps and bounds. Today, there are roughly US$800 billion in Islamic banking funds, US$100 billion in the sukuk (or Islamic bond) market and another US$100 billion in takaful (Islamic insurance) and fund management business. Hong Kong, of course, introduced the Hang Seng Shariah Compliant China Index Fund in 2008 to attract Muslim investors. Continue reading

HSBC Amanah's Deputy CEO Says to Offer Islamic Finance in India, China

HSBC Holdings Plc, the largest bank in Europe, plans to offer Shariah-compliant services in India and China to tap economic growth after the countries issue regulations to develop their Islamic financial markets.

HSBC Amanah also plans to expand in Egypt and Oman, said Razi Fakih, the deputy chief executive officer of the bank’s Islamic unit. The lender, which has operations in 10 nations including Malaysia and Saudi Arabia, is seeking to increase bank branches globally to about 125 over the next two years from 100 at the end of 2010, he said.

“Our ability to expand in these markets depends on how the regulatory environment changes in those countries,” Fakih said in a telephone interview from London today. “Licensing to foreign banks is restrictive in certain markets. We would certainly like to see ourselves in the entire Middle East.”

HSBC is trying to strengthen its brand in a market that has attracted competitors such as Barclays Plc, Citigroup Inc. and Standard Chartered Plc to tap wealth from the world’s 1.6 billion Muslims. Global assets held by Shariah-compliant financial institutions may climb to $1.6 trillion in 2012 from about $1 trillion, the Kuala Lumpur-based Islamic Financial Services Board said in April.

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HSBC Targets Branches: Mid East Roundup

HSBC’s Islamic Arm Targets 125 Branches by 2012.

HSBC Amanah, the Islamic arm of HSBC(HBC), plans to open 125 branches across the Middle East and Asia by the end of 2012, eyeing the rapid expansion in the Islamic finance industry which is worth $1 trillion, Dailystar reports.

Razi Fakih, HSBC Amanah’s deputy CEO said Islamic banking will grow at a 6% CAGR in the Middle East and Asia over the next five years. He further added that the next attractive markets will be China and India and HSBC is seeking to extend presence in countries like Egypt, Turkey, and Oman.

However, the lack of liquidity management tools and standardization in Asia and the Gulf pose challenges.

China and India to Get Qatar’s Additional LNG

Qatar, the world’s largest LNG exporter has identified two buyers for its additional capacity, Gulfbase reports, citing Qatar’s oil minister. The minister indicated that Qatar could export 7 million tonnes of LNG annually to China and about 5 million to India, from the originally planned exports of 5 million tonnes to China and 7.5 million to India. Continue reading

HwangDBS Investment keen on Middle East and Brunei investors

KUCHING: HwangDBS Investment Management Bhd is zooming in on wealthy investors in the oil-rich Middle East countries and Brunei to distribute its newly launched AIIMAN A20 China Access Fund, according to its global equities director Peter Chiang Ngee Onn.

HwangDBS Investment keen on Middle East and Brunei investors

He said the company was working with distributors in Dubai and holding talks with potentional investors from the Gulf countries and Brunei.

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