HONG KONG enters the Islamic Market

Hang Seng bank launches Hong Kong’s first Islamic fund

November 22, 2007: 05:57 AM EST

Nov. 22, 2007 (Thomson Financial delivered by Newstex) —

HONG KONG (XFN-ASIA) – Hang Seng Bank said it has launched Hong Kong’s first Islamic fund, as part of a move by the financial center to compete with Singapore and Malaysia as a hub for Muslim investment.

The new retail fund was authorised by Hong Kong’s market regulator after Chief Executive Donald Tsang last month said the government would push to develop products that comply with Islamic law.

Hang Seng Bank, a subsidiary of global banking giant HSBC, said the Hang Seng Islamic China Index Fund, will allow Islamic and other investors to gain exposure to mainland China and Hong Kong markets.

‘Islamic finance is one of the fastest growing sectors in the global financial industry,’ said William Leung, general manager of Hang Seng’s personal financial services and wealth management.

‘The Fund will help investors capture the potential investment returns generated by growing international interest in these markets,’ he said.

Leung said global Islamic financial assets are worth about 1 trln usd and he expects this to grow by 15 pct per year.

The Fund will invest primarily in the constituent stocks of the so-called Dow Jones (NYSE:DJ) Islamic Market China/Hong Kong Titans Index.

The index comprises the 30 largest Shariah-compliant stocks of companies whose primary operations are on mainland China and in Hong Kong and are traded on the Hong Kong stock exchange.

Islamic finance fuses principles of shariah or Islamic law and modern banking. Funds are banned from investing in companies associated with tobacco, alcohol or gambling, considered taboo by Muslims.

The system also bans the earning of interest.

Malaysia has ‘effectively established itself as the regional, if not global, hub for Islamic finance,’ said a report by Financial Insights, a company under market research and analysis firm International Data Corp.

Indonesia, Pakistan, Thailand and Singapore are also promoting Islamic finance.

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