A week of market turmoil explained - YouTube: ""
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Saturday 18 October 2014
Sukuk: An asset class goes mainstream | GulfNews.com
Sukuk: An asset class goes mainstream | GulfNews.com:
"Islamic finance, particularly fixed income instruments known as Sukuk, has come of age and is now an integral component of the mainstream global financial system. A decade ago, the Sukuk market was valued at $9.6 billion, issues were generally small in nature, and the market was concentrated amongst a handful of issuers; in 2013, the market topped US$269.4 billion, with an exponential growth in the number of large deals and increasing diversification of issuers. The Islamic finance industry is expected to continue growing at nearly 20 per cent per year, and the pool of investors interested in Shariah-compliant securities is expected to rise along with it. And while Islamic investors are the natural buyers of Sukuk, the appeal of Sukuk now extends far beyond the Islamic world. Some estimates suggest that conventional investors may account for as much as 40% to 60% of any individual Sukuk offering.
In our view, Sukuk may be attractive options for both Islamic and non-Islamic investors seeking to diversify their investment portfolios. Not only are the returns attractive relative to traditional fixed income assets, the volatility of Sukuk has historically been more subdued—something that could prove important in a rising interest-rate environment. Moreover, Sukuk provide exposure to some of the fast-growing and most financially sound economies in the Gulf Cooperation Council (GCC) and Southeast Asia, countries that are often underrepresented in many traditional bond indexes and funds. Due to their unique structure and market dynamics, Sukuk returns also tend to be less correlated with other parts of the global fixed income market. All of these factors, we believe, may make Sukuk an appropriate complement to investors’ existing equity or global bond allocations."
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"Islamic finance, particularly fixed income instruments known as Sukuk, has come of age and is now an integral component of the mainstream global financial system. A decade ago, the Sukuk market was valued at $9.6 billion, issues were generally small in nature, and the market was concentrated amongst a handful of issuers; in 2013, the market topped US$269.4 billion, with an exponential growth in the number of large deals and increasing diversification of issuers. The Islamic finance industry is expected to continue growing at nearly 20 per cent per year, and the pool of investors interested in Shariah-compliant securities is expected to rise along with it. And while Islamic investors are the natural buyers of Sukuk, the appeal of Sukuk now extends far beyond the Islamic world. Some estimates suggest that conventional investors may account for as much as 40% to 60% of any individual Sukuk offering.
In our view, Sukuk may be attractive options for both Islamic and non-Islamic investors seeking to diversify their investment portfolios. Not only are the returns attractive relative to traditional fixed income assets, the volatility of Sukuk has historically been more subdued—something that could prove important in a rising interest-rate environment. Moreover, Sukuk provide exposure to some of the fast-growing and most financially sound economies in the Gulf Cooperation Council (GCC) and Southeast Asia, countries that are often underrepresented in many traditional bond indexes and funds. Due to their unique structure and market dynamics, Sukuk returns also tend to be less correlated with other parts of the global fixed income market. All of these factors, we believe, may make Sukuk an appropriate complement to investors’ existing equity or global bond allocations."
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Russia Rating Cut by Moody’s on Sluggish Economic Growth - Bloomberg
Russia Rating Cut by Moody’s on Sluggish Economic Growth - Bloomberg:
"Russia’s credit rating was cut to the second-lowest investment grade by Moody’s Investors Service, which cited sluggish growth prospects worsened by the crisis in Ukraine and international sanctions.
Moody’s downgraded the government one level to Baa2 from Baa1 and kept a negative outlook on the country’s rating. It is in line with Fitch Ratings Ltd.’s credit grade and one notch above that at Standard & Poor’s, which lowered Russia to BBB- in April.
Russia has spent $13 billion from its foreign reserves this month to bolster the ruble as tumbling oil prices add to the woes of the economy that is teetering toward recession amid the sanctions by the U.S. and European Union. President Vladimir Putin and European negotiators are struggling to hold together a six-week truce in eastern Ukraine, inching forward in talks to prevent the fighting from escalating."
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"Russia’s credit rating was cut to the second-lowest investment grade by Moody’s Investors Service, which cited sluggish growth prospects worsened by the crisis in Ukraine and international sanctions.
Moody’s downgraded the government one level to Baa2 from Baa1 and kept a negative outlook on the country’s rating. It is in line with Fitch Ratings Ltd.’s credit grade and one notch above that at Standard & Poor’s, which lowered Russia to BBB- in April.
Russia has spent $13 billion from its foreign reserves this month to bolster the ruble as tumbling oil prices add to the woes of the economy that is teetering toward recession amid the sanctions by the U.S. and European Union. President Vladimir Putin and European negotiators are struggling to hold together a six-week truce in eastern Ukraine, inching forward in talks to prevent the fighting from escalating."
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Ruble Rout Forcing $13 Billion of Support Eases as Crude Gains - Bloomberg
Ruble Rout Forcing $13 Billion of Support Eases as Crude Gains - Bloomberg:
"The ruble pared its sixth straight week of declines after Russia spent $13 billion to support the currency this month and oil prices rose from a four-year low.
The ruble advanced to 0.1 percent to 45.9288 against the central bank’s basket of dollars and euros by 6 p.m. in Moscow, paring the weekly retreat to 1.9 percent. Brent oil rallied by 2 percent in London to $86.17 per barrel, its second day of gains.
Brent crude’s 25 percent tumble from a June peak has worsened the outlook for Russia, which derives more than half of its budget revenue from energy. The economy is teetering on the brink of recession as sanctions over the Ukraine crisis spur capital outflows and a domestic dollar shortage. Policy makers have stepped up efforts to buttress the ruble, and the central bank announced yesterday that it will offer as much as $3.5 billion of foreign currency repurchase agreements at debut auctions this month."
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"The ruble pared its sixth straight week of declines after Russia spent $13 billion to support the currency this month and oil prices rose from a four-year low.
The ruble advanced to 0.1 percent to 45.9288 against the central bank’s basket of dollars and euros by 6 p.m. in Moscow, paring the weekly retreat to 1.9 percent. Brent oil rallied by 2 percent in London to $86.17 per barrel, its second day of gains.
Brent crude’s 25 percent tumble from a June peak has worsened the outlook for Russia, which derives more than half of its budget revenue from energy. The economy is teetering on the brink of recession as sanctions over the Ukraine crisis spur capital outflows and a domestic dollar shortage. Policy makers have stepped up efforts to buttress the ruble, and the central bank announced yesterday that it will offer as much as $3.5 billion of foreign currency repurchase agreements at debut auctions this month."
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Saudi, Kuwait Seen Curbing Oil Output at ’Opportune Time’ - Bloomberg
Saudi, Kuwait Seen Curbing Oil Output at ’Opportune Time’ - Bloomberg:
"Saudi Arabia and Kuwait halted production at a jointly run oil field late this week, a move that could help ease a supply glut that has pushed global prices down 25 percent.
The 300,000-barrel-a-day Khafji field, located in the neutral zone between the two countries, was being shut because of environmental concerns, a person familiar with Saudi Arabian oil policy said yesterday, who asked not to be identified because the information isn’t public.
The shutdown comes as Saudi Arabia and other OPEC members face increasing pressure to scale back production while supply expands from the U.S. and other countries and demand growth slows. Asia’s oil market has become particularly flooded as the U.S. imports fewer cargoes."
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"Saudi Arabia and Kuwait halted production at a jointly run oil field late this week, a move that could help ease a supply glut that has pushed global prices down 25 percent.
The 300,000-barrel-a-day Khafji field, located in the neutral zone between the two countries, was being shut because of environmental concerns, a person familiar with Saudi Arabian oil policy said yesterday, who asked not to be identified because the information isn’t public.
The shutdown comes as Saudi Arabia and other OPEC members face increasing pressure to scale back production while supply expands from the U.S. and other countries and demand growth slows. Asia’s oil market has become particularly flooded as the U.S. imports fewer cargoes."
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