The magazine «Business Emirates» published an article by the Deputy Director of INCONA company Eugene Golotsan «Koran and Capital»
The article tells about the prospects of the stock market of Arab countries as a whole, as well as about the features of investments in the United Arab Emirates. Eugene Golotsan examines the features of Islamic finance standards. In his opinion, despite significant integration into the world economic community, Arab countries still retain the specifics of doing business largely due to the ethical norms of Islam. For example, Sharia law prohibits commercial activities related to alcohol, tobacco, gambling, etc. In addition, speculation and loan interest are prohibited in Islam. INCONA’s partner notes that the Islamic credit institution and the client are building relationships as partners in a common cause. Such practices contribute to the development of unique stock market instruments, such as, for example, sukuk.
Sukuk is the Islamic equivalent of a bond, which differs significantly from traditional forms of loan. For example, sukuk, unlike ordinary bonds, does not involve the payment of interest, since according to the Koran, money should not be made from money. The profit on sukuk can be obtained through the implementation of projects, ownership of assets, etc. It is sukuk that has recently become one of the most dynamically developing instruments of the Islamic stock market.
The article notes that against the background of instability of the European and North American stock markets, the Islamic market provides investors with a weighty alternative, increasing the inflow of foreign investments into the region. According to Ernst & Young, the assets of Islamic banking will grow to US$ 1.8 trillion in 2013. For comparison, in 2011 this figure was only US$ 1.3 trillion. The undisputed leader in absolute terms is Saudi Arabia, but despite this, the United Arab Emirates stands out most favorably. This country has created the most favorable infrastructure for doing business that meets Western standards, including transport accessibility, standard of living and business etiquette. The undoubted advantage of the Emirates is political and economic stability.
Eugene Golotsan believes that the confirmation of the advantage of the UAE stock market was the fact that one of the largest recent issues of bonds of the Dubai Water and Electricity Authority (DEWA) in the amount of US$ 1 billion. It happened not in London or Malaysia, but on the NASDAQ Dubai regional exchange. Moreover, Sheikh Mohammed bin Rashid Al Maktoum, Prime Minister of the United Arab Emirates, announced the Government’s initiative to create a special body that will coordinate and regulate the financial market. The authorities hope that a single body will make it possible to create and implement universal standards of Islamic monetary instruments not only at the national but also at the international level, thereby increasing the inflow of foreign investment to the UAE.