Islamic funds focus on India

Islamic funds, which manage $ 225 billion worth investments globally, are turning their attention to India.

The Islamic Funds-Asia 2007 meeting, which will be held in Malaysia during second week of March, will focus India as one of the key destinations for the next level of stock market investments by Islamic funds.

Their strategy for India stems from the fact that 75 per cent of market capitalisation of the domestic stock market are open to investments. Moreover, the aim is also to lure the huge untapped Muslim population in the country who are willing to invest in the 'Shari'ah-compliant' stocks.

"Considering that India has the second highest Muslim population in the world, the country has a huge potential for investments by Islamic funds," said Zafar Sareshwala, managing director and CEO of Ahmedabad-based Parsoli group. Zafar Sareshwala will make a presentation on Indian markets and their potential at the Malaysia conference.

Though European and American markets will be a topic of discussion at the meeting, there are at least three sessions dedicated to India. The meeting will discuss what role should the Islamic funds play to increase their importance in the Indian market.

The Parsoli group, which has been making efforts to lure Muslims into the capital markets, is also launching a 20 million euro Islamic fund in Germany for investments in Indian equity markets. The group already has about 900 accounts from the Muslim community for stock market investments.

Some of the participants at the three-day event include UBS, Prudential Funds, Morgan Stanley, Dubai Islamic Bank, Amiri Capital of UK and Innovest Strategic Value Advisors USA, among others.

Of the $225 billion worth Islamic funds, the booming Indian markets could easily attract $15-20 billion worth investments, said Sareshwala.

A research conducted by the Parsoli group in 100 cities in the country showed that wealth of the Muslim population is comparable to the non-Muslim communities.

However, only 0.5 per cent of the 2-3 per cent households, which have invested in stock markets, come from the minority community.

"India is perhaps the best market for Islamic funds," added Sareshwala. Over 75 per cent of market capitalisation in the country are open to Islamic investments, pointed out an analyst.

Shari'ah-compliant stock investments proscribes investment in tobacco-manufacturing products or alcohol or in casinos. Media and entertainment businesses have to adhere to the Islamic laws to invite investments.