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To take advantage of the emerging Islamic finance products market, Hong Kong will launch the Hang Seng Islamic China Fund. The Securities and Future Commission, the local regulator gave its approval for the new Islamic fund that will be run by Hang Seng Investment Management, a member of the HSBC group.

According to an estimate by the ratings agency Standard & Poor, the Islamic finance market is worth $500 billion. The potential is much more as more and more Muslims seek to invest in products compliant with their religion. These funds do not invest in businesses that make alcohol, pork-related products or those involved in gambling. These products also need to be structured to avoid paying interests. An Islamic fund usually has religious scholars on its board to help select investment that comply with the Shariah law.

Hong Kong is a relative latecomer to have joined the fray. Malaysia, a predominately-Islamic country and Singapore, which has a small Muslim population, have a developed Islamic bond market. London and Japan also have similar plans to launch Islamic bond or sukuk.

Source:Financial Times
Image:legal media group

China on Monday joined a group of policy makers in expressing concern over a weakening dollar - the world’s main reserve currency.

Wen Jiabao, the Chinese premier, told a business audience in Singapore that it was becoming difficult to manage China’s $1,430 billion foreign exchange reserves. China keeps the composition of its reserves a secret, but according to some analysts, probably two-thirds of its reserves are still in dollars.

Dollar has dropped 16% this year against a basket of major currencies.

Mr. Wen’s comments reflect the concern of the global community. Similar concerns had been expressed by members of the Group of 20 in its summit in South Africa and by the oil exporters’ group in the OPEC meeting in Riyadh.

Zhou Xiaochuan, China’s central bank chief said in Beijing that a strong dollar would help to ensure an orderly resolution of the recent market instability caused by US mortgage-lending problems.

The dollar has little changed over the past few days and had remained at around $1.4655 against euro and $2.0504 against the pound.

Mr. Wen’s comments have fuelled speculations that Beijing is likely to reduce the proportion of its reserves held in the US currency.

Source:Financial times
Image:istockphoto

The Asian markets and its economy that seem to be charging forward today with lightening speed, will soon be reportedly, threatened by an unlikely enemy.

The CHANGING CLIMATE is likely to reverse the current trend of rising success. Adverse climatic changes have been reported in various parts of the world in recent times. These are reported to have a negative effect on the climbing economy of the Asian countries.

Despite differences on a number of issues, OPEC members are united over increasing oil prices, which could touch $200 per barrel. Inaugurating the OPEC summit in Riyadh, the Venezuelan President Hugo Chavez gave a chilling warning to the global community that oil prices would reach unprecedented heights if the USA had the temerity to attack Iran.

However, internal divisions within the oil exporters group was highlighted when King Abdullah of Saudi Arabia, a key US ally sounded a moderate note and urged the community not to make ‘oil’ an issue of conflict.

The Venezuelan President, a firebrand anti-US leader urged members of the OPEC community to unite for active geopolitical reasons. OPEC’s membership is dominated by pro-Western Gulf States but also include an anti-US bloc of Iran and Venezuela.

The group has a history of using oil exports as political weapon. Its members ceased oil exports in 1973 in protest against Israel’s invasion of Syria. However, at present pro-US allies like Saudi Arabia insists on using the lobby for purely economic and commercial purposes.

The cartel is under pressure to increase its output to smoothen rising oil prices that had touched record heights at around $100 per barrel.

Image: mbendi

Source: taipei times

Is the world’s totemic currency fast loosing its hegemony? That the dollar is fast loosing its glitter has come forward in a recent online poll by the Wall Street Journal asking people which currency they would prefer to be paid in. The euro came on top, followed by the sterling, the Canadian dollar, yen and the Swiss franc trailing far behind. However, what was clear is that fewer and fewer people want to hold their assets in the US dollar.

The collapse of the sub-prime mortgage market in the US fuelled the dollar unrest. The volatility of the dollar had a global effect with British banks, which had been tied to the US financial sector facing huge losses that even brought down a British bank, Northern Rock, the first of its kind in a century.

On Friday when it was thought that the dollar has finally touched its floor, there was another warning by the US Treasury Secretary, Henry Paulson, in an international business summit in South Africa that the sub-prime crisis is going to get worse. According to him, a large number of the US homeowners are still cushioned by introductionary interest rates set when they took out loans in 2005 or 2006. When these introductory offers run out, their interest payments will increase, setting off another wave of defaults and repossessions.

The dollar is enduring its worst crisis in recent memory. According to Kenneth Froot, a Harvard University professor, part of the dollar depreciation is permanent.

The only silver lining to the dollar crisis is there seem to be a boost in US tourism and trade with more and more people across the Atlantic traveling to the US following cheap airfares. British tourists spend 785 million pounds last year in New York. There were 1,169,000 visitors to New York from UK in 2006, who on average spent 112 pounds a day.

Source:The Independent
Image:isotock

To protect borrowers of home loans from abusive banking industry the US House of Representatives passed a bill ensuring the rights of borrowers on Thursday evening. The bill, which was passed by a 291-127 vote, garnered 64 votes from the Republicans while none of the Democrats opposed the bill. However, the future of the bill becoming a law seems to be uncertain in the US Senate amid strong opposition from the mortgage industry and from the White House.

The bill would ban lenders from making loans that borrowers cannot repay, create a nationwide licensing system for mortgage brokers and make Wall Street banks that package mortgage securities into investments, liable for violation of lending laws.

The bill echoes the House’s concern for the poor condition of the mortgage market owing to its lax lending practices following which the US housing industry is currently in a pretty bad shape. Financial markets worldwide were badly hit following losses in investments tied to US home loans. Bear Stearns Cos., Britain’s HSBC Holdings and Barclays Group PLC were the latest major banks to predict huge losses. Proponents of the bill say that the current tumultuous situation in the mortgage market could have been avoided had there been strong federal laws years ago.

According to the Democrats and consumer advocates, the sub prime loans made to people with weak credit were essentially predatory. They contained confusing terms and conditions, generating high fees for mortgage lenders and forced low-income borrowers into loans they cannot repay.

However, criticisms of the bill are pouring in. Many Republicans think that the bill is an overreaction to the mortgage market’s woes and have warned of a flood of lawsuits if it became a law. According to the banking industry, the bill will limit credit availability and will prevent Americans from owning houses.

Source:msnbc
Image:murraystate

Bank of America Corporation will take a $3 billion debt-related write-down in the fourth quarter. A write-down means reducing the book value of an asset, because it is overvalued compared to the market value. This is usually reflected in the company’s income statement as an expense, thereby reducing net income.

This comes as fallout from the housing and mortgage-lending slump. Joe Price, chief financial officer added that the bank, one of the nation’s largest, is also setting aside more money for potential losses but considers the losses “manageable.

Wal-Mart has benefited from the credit markets in time of economic tension, but it caused a severe blow for the biggest home improvement chain, Home Depot. Wal-Mart Stores, Inc. is an American public corporation, currently the world’s largest public corporation by revenue, according to the 2007 Fortune Global 500.

The Home Depot is an American retailer of home improvement and construction products and services. Headquartered in Vinings, just outside Atlanta in unincorporated Cobb County, Georgia, Home Depot employs more than 355,000 people and operates 2,164 big-box format stores across the United States (including the 50 U.S. states, the District of Columbia, Puerto Rico, the United States Virgin Islands), Canada (ten provinces), Mexico and China.

The Bank of Japan kept interest rates on hold in the face of market turmoil that has sent both stocks and the dollar sliding. Being a central bank BOJ, is an entity responsible for the monetary policy of Japan. Its primary responsibility is to maintain the stability of the national currency and money supply, but more active duties include controlling subsidized-loan interest rates and acting as a “bailout” lender of last resort to the banking sector during times of financial crisis (private banks often being integral to the national financial system). It also has supervisory powers to ensure that banks and other financial institutions do not behave recklessly or fraudulently.

The European Central Bank holds displeasure with the euro’s rushed rise against the dollar. The bank’s president, Jean-Claude Trichet said,

In the recent period I have observed moves that I would say were undoubtedly sharp and abrupt. And I said already that brutal moves were never welcome.

The European Central Bank is chiefly responsible for fighting inflation and has been caught off guard by a recent jump that might otherwise prompt it to increase interest rates to contain the trend.

Julian Callow, chief Europe economist at Barclays Capital in London said,

What will matter is future volatility. You can only appraise verbal intervention over months.

Coming at a time when the Federal Reserve is cutting rates to bolster a softer American economy, the European policy has probably increased the trend toward a weaker dollar. But Mr. Trichet emphasized that the bank’s primary mandate is to fight inflation. He said,

Each of us in our own environment did what was required by the situation.

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