Gulf Capital and Islamic Finance: The Rise of the New Global Players

352 Pages·2009·1.94 MB·English

by  Aamir Rehman

Gulf
Capital
&
Islamic
Finance
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Gulf
Capital
&
Islamic
Finance
The Rise of the
New Global Players
Aamir A. Rehman
New York Chicago San Francisco Lisbon
London Madrid Mexico City Milan New Delhi
San Juan Seoul Singapore Sydney Toronto
Copyright © 2010 by Aamir A. Rehman. All rights reserved. Except as permitted under the United States
Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any
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ISBN: 978-0-07-171324-5
MHID: 0-07-171324-7
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To Drs. Razia and Abdul Rehman, for the countless sacrifices, gifts,
and blessings of parents, for which I will be eternally indebted;
and to my wife, Hina Ghory, for bearing untold burdens with
warmth and grace to enable my pursuit of a passion.
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C O N T E N T S
Acknowledgments ix
Introduction: Introducing theNewGlobalPlayers 1
PART I
BACKGROUND AND CONTEXT
Chapter 1
Floating on Wealth: The Origins and Sources of
Gulf Prosperity 23
Chapter 2
Entrusted Stewards: The Landscape of Gulf-Based
Investors 49
Chapter 3
Values and Value: Islamic Finance in the Gulf
and Beyond 89
PART II
DEVELOPMENTS AND TRENDS
Chapter 4
Smarter Money: The Increased Sophistication of
Gulf Investors 127
Chapter 5
The Home Front: The Rise of Domestic and Regional
Investments 146
vii
viii Contents
Chapter 6
On the Frontier: The Gulf’s Growing Focus on
Emerging Markets 167
Chapter 7
Principled Principals: The Increasing Shariah Affinity
of Gulf Investors 186
Chapter 8
Lifting the Curtain: Heightened Visibility and Transparency
of Gulf Investors 205
PART III
GLOBALIMPLICATIONS
Chapter 9
Tapping the Flow: Strategies for Attracting Gulf Investors 223
Chapter 10
Follow the Leader: The Impact of the Gulf on Investment
Strategies 241
Chapter 11
Rules of the Game: Policy Perspectives for Regulating
Investments 251
Chapter 12
An Essential Toolkit: Islamic Finance Capabilities 267
Conclusion: Embracing Change 285
Notes 293
Index 323
A C K N O W L E D G M E N T S
T
his book represents a collective effort. The analysis was supported
by a superb research team, led by Faisal Ghori. As research director
for the book, Faisal recruited and managed a strong team of
researchers, overseeing the research for all chapters while providing
valuable input for the book overall. Faisal also provided significant
drafting support for Chapter 9. His efforts were at the core of this
endeavor and were pivotal to its completion.
Angel Leu, in addition to leading the research for Chapter 1, also
provided comprehensive support in preparing the full manuscript
and managing its finalization. Her contributions have been critical to
completing this project on time. Andrew Goodman provided out-
standing research for Chapters 2 and 5, and also provided strong
drafting support for Chapters 5 and 10. Hisham Mabrook supported
the research for Chapter 3 and provided a thorough review of the
Islamic finance sector. Alex Campbell supported Chapter 4, contribut-
ing helpful overall research as well as transaction-specific information.
Andreea Ursu provided thorough research for Chapter 6,
exploring Gulf investments in emerging markets in detail. Chapter 7
benefited from research support by Farhan Abbasi and Marjan
Tabari, who compiled a comprehensive memo on Islamic invest-
ments. Chapter 8 was supported by Chris Blauvelt, who researched
the challenging topic of disclosure practices. Alper Gokgoz provided
a thorough research memo on sourcing Gulf capital for Chapter 9.
Chapter 10, on the implications of Gulf activities for global invest-
ment strategies, was insightfully researched by Adil Syed. Victoria
Zyp provided robust research for Chapter 11, exploring approaches
for regulating Gulf investments. Chapter 12, on Islamic finance capa-
bilities in global financial institutions, was well researched by Sabrina
Siddiqui.
Rafi-uddin Shikoh, in addition to providing general input, sup-
ported the drafting of Chapter 6. Shira Mazor assisted in the format-
ting of the manuscript. Abdur-Rahman Syed, Imran Javaid, and
Zohaib Patel provided general input and support. Munir Zilanawala,
ix