BNP Paribas Investment aims to double its Islamic assets under management this year as the global economy recovers but higher borrowing costs worldwide could dampen market sentiment, a senior official said yesterday.
BNP's Islamic assets of $500 million (Dh1.83 billion) would be boosted by demand from Shariah insurers and private banks, with investors expected to favour equities as they embrace riskier assets, the fund manager's Southeast Asia head said.
"This first quarter, it seems like all the pipeline that was slightly delayed now is coming on stream both in terms of distribution partners who are looking to launch Islamic funds and on the institutional side where investors are putting money into this market," Cheng Tan Feng said in an interview.
"A lot of the new assets that we see will be coming from Southeast Asia this year. We are working on deals that would double our assets under management this year."
Islamic investors are expected to prefer open-ended funds and emerging markets such as India and China, BNP Paribas Investment's Executive Director Hisham Abdul Rahim said.
"We've seen pockets of interest in Islamic finance emerging from places like Australia, Hong Kong, Japan, Korea, France and Britain," Cheng said.
He said the global monetary tightening could affect the Islamic finance market.
Sukuk's reputation as a safe haven investment also suffered. Many Islamic banks use the conventional Libor to price sukuk, as there is no benchmark Islamic rate.
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