Firms which produce commodities from crude palm oil to tin are expected to benefit from strong growth in these regions, said CIMB-Principal Islamic Asset Management, which manages over $350 million for institutional clients in Asia.
"Clearly, world power is moving to the East and moving to Asia and moving to emerging markets," CIMB-Principal Islamic chief executive Noripah Kamso said in an interview.
She did not name specific stocks. CIMB-Principal Islamic invests about 45 percent of its assets under management in sukuk (Islamic bonds) and the rest in equities.
The asset manager is owned by Malaysia's second largest banking group CIMB and Principal Global Investors, which is part of Principal Financial Group.
Noripah said the Islamic funds industry was expected to improve after struggling to grow in tough market conditions.
"In 2010, it will pick up in tandem with the conventional market," she said.
Ernst & Young had said in May some 70 percent of Islamic fund managers have less assets under management than the $80-100 million estimated break-even size.
It estimated assets managed by Islamic funds at around $52 billion, a fraction of the Muslim wealth pool of about $300 billion and warned that fund liquidations would rise if the industry does not develop the necessary scale.
Unlike conventional asset managers which can offer commodity and money market investments, options in Islamic investing are limited, with demand for instruments such as sukuk outstripping supply, posing a challenge to the rise of Islamic funds.
Investor confidence in sukuk was also hit earlier after several high-profile defaults involving Islamic bonds of Kuwait-based Islamic firm Investment Dar, Kuwait's International Investment Group and U.S. energy firm East Camero.
Noripah said investors were now clearer on the rights of sukuk holders following these defaults.
"It is exactly the same as a conventional structure," she said. "You need to prove default, go through the court process to take your respective rights and interests on that property." (Reporting by Liau Y-Sing;Editing by Kim Coghill)
Source : http://www.reuters.com/article/idUSSGE6850B220100906 - Sept 6, 2010
