KUWAIT, 25 October 2007 — Kuwait’s Investment Dar, the Islamic investor that bought into British carmaker Aston Martin, said yesterday it had applied for permission to open a stock market that complies with Muslim law.
The exchange would be open to Kuwaiti and foreign companies that follow Islamic rules to cater for growing demand from the world’s 1.2 billion Muslims for investments that comply with their beliefs.
“There is always a premium paid for those kind of companies,” Investment Dar’s chairman, Adnan Al-Musallam, told Reuters in an interview.
“It’s a big market. This will be attractive for a lot of companies,” he said.
A quadrupling in oil prices since 2002 has flooded the Islamic finance business with petrodollars, attracting Western and Asian firms seeking exposure to booming Gulf Arab economies. Islamic financial institutions manage more than $800 billion, according to the Islamic Development Bank.
Saudi Arabia’s Bank AlJazira is among conventional lenders that have started complying with Muslim law to tap the Islamic finance market.
Dar has applied to the Kuwaiti government for permission to set up the market. Dar would be a founder member of the exchange, Musallam said.
The Ministry of Commerce and Industry, which supervises the financial services sector in the Gulf Arab state, has yet to decide on the application, he said.
Kuwait is overhauling its financial services sector and the government plans to set up a market regulator to try to compete with regional financial hubs such as Dubai and Bahrain. The reforms have made little progress.
Like other Kuwaiti firms, Investment Dar has criticized the stock market, the Arab world’s second-largest bourse, for introducing rules that they say are deterring investment. The bourse says it wants to achieve more transparency.
Investment Dar wants to set up a British unit next year to offer advisory services for Gulf investors doing business in London, which the British government wants to turn into a center of Islamic finance.
“The City has announced that they want to become the major center for Islamic financing,” he said.
Europe remains a key market for Dar’s expansion plans, but the company is not considering major deals after buying half of luxury carmaker Aston Martin this year and properties including London’s Grosvenor House Hotel.
“I don’t think it would be wise to do any major investments now,” he said.