Islamic finance expands as wealth grows in oil-rich Gulf

DUBAI, March 9, 2008 (AFP) – The market for Islamic finance and banking is growing rapidly in the oil-rich Gulf thanks to burgeoning wealth and attractive financial instruments. Studies have put the total value of Islamic equity funds in the Gulf region at around 30 billion dollars (19.5 billion euros), said Khaled al-Masri, partner in asset management at Dubai-based Rasmala Investments.

“Investable wealth in the Gulf Cooperation Council is growing by one of the highest rates in the world … This increase is being met with more product providers and products being launched in the GCC market,” he said.

The Islamic finance industry worldwide is worth around 700 billion dollars, Moody’s Investors Services estimated in a February report.

Economies of the six GCC member states — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates — have been enjoying remarkable growth over the past few years on the back of record oil prices.

The robust economic performance has inflated local wealth in this Muslim region where many might prefer to seek profit through investments that do not contradict their beliefs.

The basic principle of Islamic finance