HSBC’s Islamic unit says funds to exceed $10bn

  • Share via facebook
  • Tweet this
  • Bookmark and Share
Wealth from GCC investors will add more than $70bn to the Islamic fund universe

Wealth from GCC investors will add more than $70bn to the Islamic fund universe

HSBC Amanah Securities Services, part of HSBC Holdings, will more than double the value of the Islamic funds it services to exceed $10bn after it helps to set up funds in the next 12 to 18 months.

Demand for Islamic funds has risen in the past three to six months as the global economic slowdown prompted investors to seek alternative investments to help manage risk, according to Germain Birgen, Luxembourg-based global head of HSBC Amanah Securities. The unit will help set up more than 30 Sharia-compliant funds globally.

About $10 trillion was wiped from the value of global equities in the third quarter amid concern a worsening European debt crisis will derail global growth. Sharia law forbids gambling, investments in alcohol and receipt of interest, so fund managers have to select investments deemed halal, or permissible.

“Islamic funds are not exposed to the same level of derivative techniques as conventional funds,” he said in a telephone interview from Luxembourg today. “Conventional institutional managers, targeting institutional investors such as pension funds or insurance companies, are investing in socially responsible investments, which in most markets, Islamic funds fall under that category,” he said.

HSBC Amanah Securities has received a growing number of queries for Islamic funds from clients in countries, such as Australia, South Africa and Brazil, he said. “One project coming from Brazil relates to a private equity fund investing into farming, Brazil being one of the world’s biggest exporter of halal meat,” Birgen said.

Wealth from investors in the Gulf Cooperation Council will add more than $70bn to the so-called addressable Islamic fund universe by 2013, Ernst & Young MENA said last month.

“Increasingly, people are seeing the value in attracting the world’s Muslim wealth with such funds,” Birgen said. “With the current size of the industry, there aren’t enough funds.”

HSBC Amanah Securities services 90 funds in 12 domiciles valued at about $5bn, a tenth of the Sharia-complaint fund industry, Birgen said. Mature fund markets, such as Malaysia and Saudi Arabia, target mainly local investors, he said. The new funds will help attract “large, conventional players” worldwide.

The unit will help establish some of the funds in Luxembourg, Ireland and Singapore, where regulations are more familiar to international investors, he said.

Related:
Companies
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Dubai mulls rule change to lure more domiciled funds

Dubai mulls rule change to lure more domiciled funds

Proposed rules would create a new class of funds in the Dubai...

Gulf's rift over Qatar may slow investment, reforms

Gulf's rift over Qatar may slow investment, reforms

Analysts suggest dispute may not hurt immediately but could impact...

Dodgy data obscure reality of Gulf's economic boom

Dodgy data obscure reality of Gulf's economic boom

Economists say that as Gulf opens wider to foreign investment...

Most Discussed
  • 54
    Three UAE women attacked with hammer at London hotel

    I really feel that Arabian Business.Com should now close this comments page. This should be all about sympathy for the families not what it is/has turned... more

    Wednesday, 16 April 2014 1:06 PM - Adrienne
  • 51
    Why Dubai isn't a plastic city

    What is definitely not a plastic city. The Arabs have a culture dating back to several centuries. 50 years back Dubai was just a fishing village. Today... more

    Tuesday, 8 April 2014 3:49 PM - P. MADHUSUDAN
  • 48
    DMCC boss Ahmed Bin Sulayem entertains Robert Mugabe in Dubai

    @fga ''However today, simply because he decided to dispossess a few white farmers of their land and redistribute to the poorer indigenous blacks'' more

    Sunday, 13 April 2014 3:02 PM - Matt Williams