The 9th Annual World Islamic Funds and Financial Markets Conference (WIFFMC 2013) witnessed a high-profile opening today at the Gulf Hotel in the Kingdom of Bahrain. Confirming its position as the world’s largest and most influential annual gathering of Islamic investment leaders, WIFFMC 2013 convened the leading players, industry thought leaders and key regulators in the international Islamic funds and investments industry for discussions that focused on broadening the base of investors and issuers; and boosting the international growth of Islamic capital markets and investments.
Held under the strategic partnership of the Central Bank of Bahrain, the two day event was opened on Monday by Abdul Rahman Mohammed Al Baker, Executive Director Financial Institutions Supervision at the Central Bank of Bahrain, who provided insights into creating stronger regulatory frameworks to support the international development of the Islamic funds and investments industry.
The inaugural address was immediately followed by a special keynote address by Dr. Khaled Al Fakih, Secretary-General and Chief Executive Officer of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).
Discussing key strategies to strengthen the global architecture for the Islamic investments industry, Dr. Al Fakih said that the “Islamic funds and investments industry has become an increasingly important component of the global financial markets. In particular, the global issuance of Islamic instruments, especially Sukuk, has played a key role in building cross-border linkages between issuers and international investors and has paved the way for the creation of a supply of Islamic financial instruments.”
“However, it has not led as yet, to the promotion of active and efficient secondary markets and a greater focus is needed in this regard,” he added.
“Vibrant secondary markets will not only allow Sukuk markets to develop further, but also play a key role in developing Islamic asset and fund management industries.”
“While there is real potential for further growth, there are also challenges that the industry needs to address,” he said.
A key highlight of the 9th Annual World Islamic Funds and Financial Markets (WIFFMC 2013) was the highly interactive CEOs & Industry Leaders’ Power Debate session led by internationally respected industry players. The session moderated by Dr. Sayd Farook, Global Head Islamic Capital Markets, Thomson Reuters and featuring Hasan S. AlJabri, Chief Executive Officer of SEDCO Capital; Rachid Ouaich, Chairman and Co-Founder of Islamic Finance Professionals’ Association; and Mohieddine Kronfol, Chief Investment Officer Global Sukuk and MENA Fixed Income, Franklin Templeton Investments (ME) Limited, analysed key strategies to overcome the challenges facing the Islamic asset management industry and addressed the need for cross-border distribution of funds and improving the competitiveness of Islamic funds.
“Equity still dominates the overall allocation in the Islamic finance industry, representing around 39% of the assets under management,” speaking during a Power Debate session, Hasan S. AlJabri, Chief Executive Officer of SEDCO Capital, said.
“The industry needs new asset classes like private equity, infrastructure, and liquidity products.”
“In 2012 Muslims represented around 25.7% of the world population and by 2050 this figure is expected to grow to 30%, representing an ever growing global market with various financial needs for innovative Shari’ah-compliant products to meet the demand,” he added.
“Investor appetite for Shari’ah-compliant investment options is pushing the Islamic funds and investments industry into the mainstream and the increasing demand for quality Sukuk in particular has played a key role in this. Recent reports and industry estimates project that Sukuk issuance worldwide is set to cross $100 billion again this year. Though there has been a significant spike in the demand for Islamic investment alternatives, supply is still lagging behind,” David McLean, Chief Executive of the World Islamic Funds and Financial Markets Conference, said.
“A key challenge that the Islamic investment and asset management industry is facing at the moment is lack of diversity.” “Moreover, the industry is currently geographically skewed towards the Middle East and South East Asia, although this is rapidly changing as more international investors look at Shari’ah-compliant products,” he said.
“The industry’s successful future can be significantly enhanced by broadening the base of issuers and investors,” he added.
“It is quite commendable what the Islamic finance has industry has achieved in the last decade with the global Islamic banking assets closing in on the $2trillion mark. However there is a lot more work to do to further support the push of Islamic finance into the mainstream,” he added.
“This December, we will be celebrating the 20th Anniversary of our flagship event, the World Islamic Banking Conference (WIBC) in the Kingdom of Bahrain, and we would like to take this opportunity to invite global leaders in Islamic finance to take part in the critical discussions at this landmark event that will not only celebrate the achievements of the Islamic finance industry but will also feature forward looking discussions focusing on bringing significant transformations in the Islamic finance industry to improve its global competitive position.”
Analysing the global and regional economic outlook and assessing their impact on the Islamic funds and investments market Dr. Jarmo Kotilaine, Chief Economist and Executive Director of Strategy and Planning at the Bahrain Economic Development Board said that the MENA region with a population of around 400 million has a high population growth of 2% compared with global growth rate of 1.1%. “Today, with half of its population under the age of 25, MENA has the second youngest population among world regions, after sub-Saharan Africa.”
“The urban population in the MENA region is rising rapidly and according to the World Bank projections by 2050 more than 75% of the population will be living in an urban setting compared with 35% in 1960. The high rate of urbanization will drive a high demand for provision of adequate infrastructure, healthcare, education and other services such as finance and telecommunications, and so on. Given this, the potential for Islamic finance to step in and explore opportunities is immense, especially due to the nature of its risk sharing mechanism and focus on real assets.”
WIFFMC 2013 continues on the 28th of May and will feature high-profile discussions on improving the international standards and harmonization of industry practices to ensure sustainable international growth in the Islamic funds and investments industry.