Shariah in­vest­ments bullish

Pakistan Observer - - ISLAMIC BANKING & FINANCE -

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

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