But there is evidence that the flow of money to the West - particularly the United States - that occurred in the oil shock years of the 1970s is not being repeated this time, raising questions over the attractiveness of US dollar denominated assets.
According to research to be unveiled at the International Islamic Finance Forum in Istanbul, Turkey, later this month, conservative estimates of private wealth in the Arabian Gulf states stand at around US$1.5 trillion.
Of that figure, some $250 billion is reckoned to be managed by Islamic institutions and another $400 billion by international finance houses.
But this is thought to heavily underestimate the real value of recent increases in private wealth in the region, along with the major growth in the conversion of transactions from conventional to Islamic modes that has taken place during the current oil-driven boom.
According to a leading researcher taking part in next month's forum, World Trade Organisation rules, privatisation and economic liberalisation are also having an impact.
The way private wealth is accumulated is changing and the old paradigms of how wealth is redistributed between ruling family members and the merchant classes no longer holds true.
Until now the wealth pattern of several Gulf states relied on state subsidies for hospitals, schools, infrastructure and no direct taxation. This combined with a benign regulatory environment to allow the generation of wealth domestically that was then exported to the West for investment.
That pattern is changing. Analysts in both the Middle East and the West agree that the huge outflows from oil producing countries, which helped support the US dollar in the 1970s, are just not happening this time.
Some of those flows have gone to the Euro but Gulf investors are also now much more inclined to invest domestically and are provided with more infrastructure investment opportunities than in the past.
"Though Islamic finance jurisprudence says a lot about what can or cannot be invested in, it has little to say on where to invest," the researcher concludes.
The impact of high oil prices is just one of the issues to be debated at the International Islamic Finance Forum in Istanbul, the world's biggest gathering of Islamic finance practitioners from more than 50 countries with over 50 speakers.
The regulation of Islamic banks in the West and in Muslim countries will be discussed, along with the development of Islamic finance in the European Union. The role of regulators, exchanges, industry organisations and the media will be examined in a debate on transparency, disclosure and corporate governance.
The forum will also examine the status of Islamic hedge funds, the booming trade in Sukuk (Islamic bonds), retail and corporate lines of Islamic credit and derivatives. Mortgages, auto financing, consumer finance, along with Islamic credit/charge/debit cards across the world will also come under the spotlight.
Turkey's Islamic banks (known as special finance houses) are increasing their market share in a country predominantly Muslim but with a secular tradition. But is enough being done to allow that growth to continue, delegates will be asked.
In addition, the forum brings together the world's leading scholars in Islamic jurisprudence for a dedicated day of debate on the issues and challenges raised by rulings and opinions affecting Islamic finance internationally.
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Arabian Gulf private wealth estimated at USD1.5 trillion
- United Arab Emirates: Tuesday, September 07 - 2004 at 12:33
- PRESS RELEASE
Private wealth in the Middle East - particularly the Arabian Gulf states - is growing at an unprecedented rate, principally due to higher oil prices, according to new research.
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The International Islamic Finance Forum - known as the "premier event" in the multi-billion dollar no-interest financial industry - attracts hundreds of the world's top Islamic finance practitioners from more than 50 countries.The forum, which takes places twice a year in the United Arab Emirates and Turkey, was first held in Istanbul in September last year and was judged a major success. The forum taking place in Istanbul from 27 to 29 September this year will be even bigger and the most successful yet, say the organisers.
"The International Islamic Finance Forum has its imitators, but in bringing together pioneering international policymakers, business leaders and the world's leading Islamic scholars for open and highly topical debates, the forum has no equal," said Dubai-based IIR Middle East, the forum organisers.
The international industry has been growing at a projected rate of 15% a year and is currently estimated to be worth something in excess of US$300 billion as new Islamically-compliant financial instruments and products are introduced.
"Commercially-minded, practitioner-focused and aimed at furthering the development of the world's fastest growing financial sector, the forum is unchallenged as the most important international networking event in the calendar of the multi-billion dollar global Islamic finance industry," said forum director Chris Mullinger.
"At each forum, participants learn of new developments and opportunities, make new contacts, discover new business streams and make deals. Many return to each and every forum after discovering the unique value they offer."
The Istanbul 2004 event has attracted high-level international associations and sponsorships.
The event is run in association with Dow Jones Indexes of the USA. The broad DJ Islamic Market Index (DJIM-Global) has 1,600 plus companies with a market cap of $9 trillion.
Diamond Sponsor of the Forum is the National Commercial Bank, Saudi Arabia. With active branches in Bahrain and Beirut, five overseas representation offices and more than 600 foreign correspondent banks, the NCB is currently positioned as the largest bank throughout the Arab world.
The NCB is the leading provider of Islamically-compliant products and services and is the largest mutual fund manager in the Kingdom, with a 51% market share and more than SR25 billion invested in 27 funds, including 14 Islamic funds.
Platinum Sponsors are Oasis Global Management, South Africa and Ireland; and HSBC Amanah. Oasis has generated an impressive track record and was responsible for the management of the best performing Islamic Global Equity Fund in 2001 and 2002. HSBC Amanah is the global Islamic financial services division of the HSBC Group, and was established with the aim of making HSBC the leading provider of value added Islamic financial services worldwide.
Gold Sponsors are Bahrain Financial Harbour, a US$1.3 billion masterplan development, encompassing finance, commerce, lifestyle, leisure and the arts.
Silver Sponsors are Unicorn Investment Bank, a Bahrain based Islamic investment bank regulated by the Bahrain Monetary Agency.
Other Sponsors and Exhibitors include: Kuveyt Turk, Turkey; Vinson & Elkins, USA and UAE; Wafra, USA; Accpac, UAE; Solidarity, Bahrain; FWU Group, Germany.
For further details and background on the International Islamic Finance Forum, please visit www.iiff.com where you can register for frequent updates.
FOR FURTHER INFORMATION CONTACT
CHRIS MULLINGER IIR ME
Tel: +971 4 3365161
Fax: +971 4 3352682
Posted by Anne-Birte Stensgaard, Senior News EditorTuesday, September 07 - 2004 at 12:33 UAE local time (GMT+4)
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