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Dow Jones Indexes Being Set Up in the Muslim World

by Mushtak Parker

Private Equity Fund Of Funds Dow Jones Indexes, a leading global index provider, seems to be targeting the Arab and Muslim countries with the launch of a spate of regional and local share indexes.

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The Dow Jones Indexes SM and the NYSE Short Interest Data are proprietary to and distributed by Dow Jones & Company, Inc. and The New York Stock Exchange respectively and have been licensed for use. You will neither (I) copy, download, store, reproduce or further transmit or distribute the Indexes for commercial purposes in any type of format or by any means, including but not limited to the Internet, Intranet or other type of network nor (II) use the Indexes as the basis of financial instruments or investment products (e.g., managed funds) or The New York Stock Exchange for such purpose.

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Capital Casebook Equity May 8, 2005 (AXcess News) London - Dow Jones Indexes, a leading global index provider, seems to be targeting the Arab and Muslim countries with the launch of a spate of regional and local share indexes over the last and next few months in markets ranging from Dubai, to Turkey, Malaysia and Bahrain.

The USD index (USDX), a gauge of the greenback's value against six major currencies slipped to a low below 80 which has not been seen since 1992.however on contrary the Dow Jones rebounded sharply, rising 286pts (2.2%), while the NASDAQ strengthened by 36pts (1.4%).

Private Investment In Public The strategy in the Muslim countries is aimed at both the conventional and Islamic equity markets. The core business of Dow Jones Indexes, which number more than 3,000, of course is to develop, maintain and license market indexes for use as benchmarks and as the basis of investment products. Its Dow Jones Industrial Average is perhaps the world's best known stock indicator.In June, for instance, Dow Jones in cooperation with the Bahrain Stock Exchange will launch the Dow Jones Bahrain Stock Exchange Index, a broad benchmark conventional equity index comprising all stocks that are listed at the Bahrain Stock Exchange, and available for trading.In June also, Dow Jones, in cooperation with RHB Research Institute, the research and equity investment advisory arm of RHB Capital Berhad, one of the three largest banking groups in Malaysia, will launch the Dow Jones-RHB Islamic Malaysia Index, a Shariah-compliant index which will include Islamic equities listed and traded on Bursa Malaysia, the national stock exchange.These follow the indexes launched in June and September 2004 using the same modus operandi - the DJ-DIFC Arabia Titans 50, the Kuwait-heavy Middle East conventional equity index launched in June 2004 by Dow Jones in cooperation with the Dubai International Financial Center (DIFC);
and the Dow Jones Islamic Turkey Index, set up in September 2004 similarly with a Turkish partner to track stocks traded on the Istanbul Stock Exchange that are compatible with Islamic investment guidelines.

Yesterday the JPY crosses continued to range trade as a result of high volatility in the Dow Jones Industrial Average thereby limiting trading activity. As a result of the strong relationship between carry trades and the Dow, 4.5% and was much lower than the expected figure of 1.6%. This weak machinery orders figure was supposed to extend recent gains of the yen crosses yesterday but it had little effect as a result of Dow volatility and caution by traders ahead of the Bank of Japan interest rate announcement tomorrow. No rate hike is expected but since the current account surplus hit a record high and the CGPI inflation index rose 2.0% to 2.2% year we could see a strong GDP figure and hawkish comments from the BoJ Governor Fukui at the upcoming monetary policy meeting.

Equity Mutual Funds This strategy is just the beginning of the global index provider's expansion plans for the Muslim world. In between the objectives of promoting transparency and the quality of financial data and reporting in these markets, there is the more important business of generating new opportunities, and therefore profits.To be fair to Dow Jones, some of these initiatives are being bought and driven by the partners, perhaps more for reasons of prestige and status, than a genuine and therefore realistic desire to develop their capital markets.

Birmingham Contact Equity In a recent article, Rushdi Siddiqui, the Global Head of Dow Jones Islamic Market Indexes (the Islamic index division of Dow Jones Indexes) posed a very revealing question. He asked: "The Arab Monetary Fund's Composite Index, and Shuaa Capital's Arab Composite Index have neither gained traction in Western financial markets, nor in local or regional financial markets. So why should they accept the DJ-DIFC Arabia Titans 50 as the benchmark and basis for investible products in any specific region?"

Private Equity Investment Firm His answer was perhaps even more to the point. It comes down to the identity of the offering institution; the quality of data; and equivalent comparisons. "A global index provider like Dow Jones Indexes," he stressed unabashedly, "has more credibility in creating, calculating, and disseminating indexes, either stand-alone or co-branded, than a financial institution or a quasi-government organization."

Complying Deal Equity Funds Perhaps one can excuse this pitch for new business, as long as Dow Jones Indexes or its Islamic equity index arm, Dow Jones Islamic Market Index, does not think that it has the right to monopolize the equity index sector.This simply because of its self-styled perception of a Western index provider par excellence with greater transparency, better quality data and analysis. It was only a year or two ago, when the US authorities and their European counterparts were fining top Western financial institutions and their equity research analysts for selling short their clients by advising them to invest in stocks which they themselves privately considered to be junk and not worth investing in.It would indeed be both presumptuous and patronizing for any global index provider to think that their route or a tie-up with them is the only way to equity index bliss. Take for instance, the Dow Jones-RHB Islamic Malaysia Index. This, in fact, is not a new index per se.It is built on the RHB Islamic Market Index launched in 1996, well before Dow Jones even considered an entry into the Islamic equity index market.

Equity Msn Private Wyoming The RHB Islamic Market Index was established by RHB Research Institute and RHB Unit Trust Management Berhad, and driven by the latter's CEO, Nik Ezar Nik Bolia. For almost a decade it has been the benchmark for the Malaysian Islamic unit trust and mutual fund industry, which today totals more than 61 such funds with a total estimated fund size nearing $2 billion.

American Equity Investment Neither a lack of transparency nor dearth of quality data are problems in Malaysia, which has one of the best capital market reporting and regulatory regimes in the world.

Equity Index Funds In fact, some Malaysian asset managers have questioned the necessity for this tie-up with Dow Jones, given also the fact that there is a second Islamic equity benchmark, the Bursa Malaysia's Syariah Index.So, perhaps in this instance Dow Jones is getting more than it is putting in. Lars Hamich, managing director of STOXX Ltd., the joint venture that is responsible for Dow Jones Indexes" business development in Asia, Europe and the Middle East, stresses that the Dow Jones-RJB Islamic Malaysia Index "is to meet the growing demand for compliant equity indexes, and is based on internationally acknowledged Islamic finance standards."The truth is that this index is capitalizing on the perceived market differences of Shariah interpretations between Malaysian scholars and their counterparts in the Gulf and Pakistan. In the equity sector these differences in any case are not that wide as say in the bonds and securities sector.

Equity Private Team Wyoming From a business point of view, the Malaysian unit trusts are largely onshore and denominated in the Ringgit.If the new benchmark is going to have the impact of widening the investment base and attracting foreign investors, the fund promoters will have to launch a spate of new offshore Islamic equity funds to attract these foreign investors and which could then use the Dow Jones-RHB Islamic Malaysia Index.

Equity Group Investment On the other hand, according to Hamich, "the Dow Jones Bahrain Stock Exchange Index is a natural extension of our activities in the Gulf region to measure the performance of an Arab country. The index will also be licensed to investment companies to be used as underlying for financial products.

Capital Development Equity Dow Jones Indexes is committed to further expand its presence in this region."

Article Between Difference Whether the index contributes to enhancing the transparency and attractiveness of the Bahrain market remains a moot point, for one index and its provider alone cannot change the culture of a capital market. But banks and organizations in the Muslim markets should not shy away from forging alliances with other global index providers such as the FTSE, MSCI and the Russell Group, even if they are not as proactive as Dow Jones, if only in the interest of diversity and competition.Source: Arabnews

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