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Saturday, 7 November 2015

Sukuk: The Islamic Way of Investing

WASHINGTON, Nov. 6, 2015 /PRNewswire/ -- A two-day ASEAN Islamic Finance Conference, held at the National Press Club of Washington and the Embassy of Malaysia, brought together over 50 leading Islamic Capital Market and U.S. business leaders last week. The conference was an important opportunity for prominent international dignitaries, business leaders, and the public to meet and to network with members of the ASEAN diplomatic communities.
During an introductory address, H.E. Datuk Dr. Awang Adek Bin Hussin, Ambassador of Malaysia, spoke about the noticeable growth of the Islamic Capital Markets. "This is only the beginning," he said. "We expect them to increase even more significantly now that British Prime Minister David Cameron announced his plans to make U.K. a major financial center for Islamic bonds in the western hemisphere."
What distinguish Islamic bonds (Sukuk) from conventional bonds is their low risk. Instead of being paid interest, investors are buying into the business and receiving a percentage of its real income. For this reason, it becomes an important investment with solid protection. Conference speaker, Owaiz M. Dadabhoy, Director of Islamic Investing and Islamic Investment Group Manager, Saturna Capital, summed it up succinctly by saying "that the greatest benefit of Sukuk is their high performance. Also, unlike bonds, they are transparent from top down and bottom up, and easier to evaluate as an investment."
Roy Michael, executive director of the Malaysian US Chamber of Commerce, attributed the success of the Islamic financial market to the non-speculative and low interest rates as compared to  the speculative nature of many of today's conventional investments.
"Investors want investments that will provide larger return and safer performance," Michael said. "While conventional investments are recovering from the negative market events of the past seven years, Islamic bonds have demonstrated strong demand-driven gain."
Michael believes that the growing choice of Islamic investment funds is making Sukuk very attractive to many investors. He thinks it will be a matter of time before pension houses, private bankers, and institutional investors in the U.S. start considering the Islamic bond market seriously.

In summary, Ambassador Hussin, said, "I expect the long-term benefits of our growing new relationship will enhance stability and peace, and accelerate social and cultural progress by providing an attractive region for U.S. companies to cultivate long-term business relationships. I am optimistic that someday soon ASEAN will be one of the bright spots that will bring light to our world.

(Market Watch / 06 November 2015)
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