Saudi Arabia strengthens position as world’s largest Islamic finance market

Saudi Arabia had total Islamic finance assets of $339 billion as of March 2020, leaving Malaysia in a distant second place with $145 billion. (Reuters)
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Updated 29 September 2020

Saudi Arabia strengthens position as world’s largest Islamic finance market

  • Moody’s anticipates a shift to more Shariah-compliant finance over the next 12-18 months as corporates and households increasingly use Islamic products
  • VP-Senior Analyst at Moody’s Ashraf Madani: A comprehensive set of Islamic finance regulations have spurred Saudi banks to issue sukuk

LONDON: Islamic financing in Saudi Arabia will reach around 80 percent of system-wide loans in the next 12-18 months according to a report from Moody’s.
That compares to 78 percent of loans in the Kingdom in 2019 and 70 percent in 2013, the credit ratings agency said in a report on Tuesday.
Moody’s anticipates a shift to more Shariah-compliant finance over the next 12-18 months as corporates and households increasingly use Islamic products, even as low oil prices and the coronavirus crisis cause economic challenges.
Saudi Arabia had total Islamic finance assets of $339 billion as of March 2020, leaving Malaysia in a distant second  place with $145 billion.
“A comprehensive set of Islamic finance regulations have spurred Saudi banks to issue sukuk, Islamic products are now listed on the main market, and an Islamic mortgage refinancing businesshas been established,” said Ashraf Madani, VP-Senior Analyst at Moody’s.
The industry will further benefit from increased government sukuk issuance, potentially rising foreign investment supported by more lenient entry rules and deepening capital markets, Moody’s said.
A wave of mergers and acquisitions across the region is also accelerating the penetration of Islamic finance.


Turkish lira slides to record low of 8 against dollar

Updated 5 min 41 sec ago

Turkish lira slides to record low of 8 against dollar

  • The lira has lost 26 percent of its value against the dollar since the start of the year
  • The Turkish currency also recorded its lowest level against the euro, trading near 9.52
ANKARA: Turkey’s lira on Monday set a new record low against the US dollar after the central bank refused to raise its main interest rate and tensions increased sharply with the country’s Western allies.
The lira was at 8.03 against the dollar at around 0730 GMT, suffering a loss of nearly one percent since the start of the day.
The Turkish currency also recorded its lowest level against the euro, trading near 9.52.
The lira has lost 26 percent of its value against the dollar since the start of the year.
Turkey’s central bank last week upset the markets which had expected a 175 basis points hike to the one-week repo rate.
The bank opted instead to keep the rate unchanged at 10.25 percent despite market concerns over persistently high inflation, which remains in double-digits, and worries about a sharp drop in foreign currency reserves.
Consumer price inflation was 11.75 percent in September.
The bank’s governor will deliver the quarterly inflation report on Wednesday in Istanbul.
The lira’s decline comes at a time of strained relations with NATO allies including France, Greece and the United States over multiple issues.
Turkish President Recep Tayyip Erdogan angered Paris after he said his French counterpart Emmanuel Macron needed to have “mental checks” at the weekend.
France responded by recalling its ambassador to Ankara and on Saturday described Erdogan’s comments as “unacceptable.”