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Islamic finance moves into the mainstream

Financial engineering for ethical investors

Hyundai, Citibank and Bechtel: Citi's global Islamic products group has
done deals for Hyundai's UK based trading arm and Bechtel's civil
engineering projects in Turkey

Islamic finance is slowly proving that it is competitive with the mainstream sector. In Malaysia, issuance of Islamic private debt securities has risen from 1.1% of the local debt market in 1992 to 42% in 2001. Companies controlled by non-Muslims account for about 30% of the volume of Islamic private-debt securities issued in Malaysia. Many of the largest domestic debt issuers use Islamic structures because they give them access to the liquidity of large Islamic institutional investors, such as Tabung Haji, the pilgrimage savers' fund, in addition to that of conventional investors.

In Saudi Arabia anecdotal evidence suggests that in the domestic market more new money is flowing into Islamic products than into conventional ones. The Islamic banking operations of one Saudi bank, National Commercial Bank, look set to eclipse its parent.

Opportunities in Islamic finance are not confined to markets with large Muslim populations such as the Middle East, Malaysia, Indonesia, and Pakistan.