Mr. Mohamed Suliman Al-Omar, KFH General Manager stressed that KFH has taken a leading step characterizing its multiple quality contributions and adding new areas to the Islamic banking business; namely, the incorporation of a company with a capital of KD 100 million (USD 350 million) that is fully owned by KFH. The company aims at developing an investment financial instruments market in accordance with the Sharia'h principles; namely, Sukuk being a legitimate alternative for bonds investment and trading in a secondary market for issuing Sukuk, thus paving the way, for the first time in history, for the establishment of a market for the trading Sukuk being issued by the Islamic financial institutions world wide.
During Al-Ghabqa held the day before yesterday by KFH to host the journalists at Marina Hotel, Al-Omar outlined that the KFH's initiative for incorporating the company really reinforces KFH's role as a leading market maker through enabling the issuing, selling, and buying of the issued Sukuk that have a credit rating; hence achieving what the Islamic financial industry lacks today. That is because Sukuk holders, whether corporate or individuals, can in no way liquidate these Sukuk and get quick cash revenues from the fair exchange of such Sukuk in a market, and the same occurs when there is a desire for holding Sukuk after the issuance process ends. KFH's role will be to provide alternatives for those who want to sell or buy Sukuk; a matter which will provide great flexibility in the investment of Sukuk as a distinct Islamic product.
"The international Sukuk market value settled at USD 24.5 billion (KFH's portion exceeds USD 4 billion) during the 1st half of 2007 which is 75% over the previous year. Issuance of Sukuk worth USD 16 billion is expected at the end of the current year", Al-Omar wend on.
"Sukuk worth USD 6.3 billion were issued by institutions and companies in the GCC during the 1st half of 2007, against issuance worth USD 9 billion in 2006. Volume of outstanding international Sukuk, whether they are sovereign or corporate, is expected to reach USD 70 billion by mid 2008 and USD 225 billion by 2010. Present Sukuk trading ranges between USD 100-200 million per month at the time being, and Malaysia accounts for around 36% and issuers in the Gulf account for more than 30% of the outstanding issues", Al-Omar added.
He said also that the value of the projects due to be financed in the Gulf region alone, whether by the private sector or governments, during the next 10 years is worth USD 800 billion. Sukuk shall be the most prominent financial instruments that will participate in providing cash for these projects, thus participation in the development efforts in our Gulf communities as an Islamic financial instrument of the Islamic business that is based primarily on the concept of land population and construction.
Talking about the local market and KFH's share that is growing day after day till KFH has become a key market maker and positive driver for many market components in light of KFH's strategy to support the dealers and activate the market for the benefit of all and for the benefit of the national economy, Al-Omar stressed that figures do reflect the remarkable growth in KFH's market share from the clients' deposits. He further added that KFH's share reached 24.5% of the total client's deposits at the Kuwaiti banks at the end of the 1st half of 2007, noting that KFH's total profits during the 1st h