Shariah investments bullish
JEDDAH—Shariah investing is forecast to grow very rapidly, following the long-term trends of emerging markets, according to Dr Mark Mobius, Executive Chairman of Templeton Emerging Markets Group. Comparing the performance of emerging markets as a whole and Shariah investments in particular against global performance, Dr Mobius found that emerging markets outperformed US and world markets in 17 out of the last 28 one-year periods.
“MSCI World Islamic Index has been running the same way as the general emerging markets index, slightly underperforming, but both have outperformed the world index,” he added. Looking at individual countries, he cited Islamic stocks in Indonesia, Malaysia and Turkey doing particularly well.
Trends in GDP growth and foreign reserves show emerging markets to be in better health than developed markets. Exports for emerging markets have grown from 20 percent of world exports to 35 percent and continue to climb. “40 percent of world GDP is in emerging markets, and I can see the day when it will pass 50 percent,” Dr Mobius predicted. Muslim majority countries in emerging markets are riding along this upward trend, with GDP growth currently at 8 percent, up from 4 percent in 1987.
The recent dip in performance for emerging markets where it has under performed against the US and the world, has only reinforced Dr Mobius’ conviction in his analysis. “For the last three years, people have been underweight in emerging markets, which to me is very good news, because once they change their minds.—SG