Summit Notebook

Exclusive outtakes from industry leaders

Islamic finance just one more crisis victim?

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It’s not just traditional western banks that are hurting — the recession is hitting Islamic finance hard, too.

The industry, which operates according to Islamic law and hence has an in-built conservative investment strategy, is seen as relatively insulated from the financial crisis. But some executives at the Reuters Islamic Banking and Finance Summit are not so sure.

Islamic finance should still be able to combat the crisis better than conventional banks but big problems loom if liquidity remains tight. In fact Sohail Zubairi, head of consultancy Dar Al Sharia, reckons they’re facing up to a crisis scenario that could include forced consolidation and layoffs.

“There is a real threat to the business of Islamic banking,” Zubairi told Reuters reporters at the summit in Dubai. “If the liquidity does not return, we will not be able to continue doing our business.”

Is Dubai real estate downturn reason for sukuk slump?

This week we had the opportunity to speak with Mohsin Khan, Senior Fellow at the Peterson Institute for International Economics and the former head of the Middle East department at the International Monetary Fund, ahead of the 2009 Reuters Islamic Banking and Finance Summit. I asked him why he thought that the once red-hot market for Islamic bonds had slowed to a trickle. Khan says some of the largest issuers of Islamic bonds, or sukuk, were real estate developers and the reason corporations are reluctant to buy or issue sukuk these days is due in large part to the continuing decline in the value of real estate in Dubai. Click below to listen:
Kahn on sukuk issues from Reuters TV on Vimeo.

Could Islamic banking consolidation bring more uniformity?

Mohsin Khan, former head of the Middle East department at the International Monetary Fund, says the Islamic banking industry could benefit from consolidation by reducing the number of sharia boards, or groups of Islamic scholars, that each bank employs in the Middle East to decide whether or not investments comply with Islamic law. I spoke with Khan earlier this week ahead of the 2009 Reuters Islamic Banking and Finance Summit that kicks-off on April 13th in Dubai, Bahrain, Kuala Lumpur and London. Click here to listen:
Kahn on consolidation from Reuters TV on Vimeo.

Audio – The family jewels

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This week’s annual Reuters Global Mining and Steel Summit has been a pretty rich event.

Oh, the guests have been stellar, for sure, but there’s also been a lot of talk about gold and jewelry and the prospect that maybe someday this lousy economy will turn around.

Audio – For best M&A results? Don’t forget the fish and the booze!

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There is an entire industry out there about what to do to make a merger a success. Many of us know bankers or lawyers who work for weeks and hours on end just to make sure their deals are perfectly done with all the t’s crossed and the i’s dotted.

Millions of dollars are spent on just teaching people the best way to get a transaction from idea to completion.

Investors hoarding gold?

This week we’ve brought you interviews with some of the world’s best-known mining and steel companies. One thing that we’ve heard over and over again is: gold is king. Industry watchers say thinking of gold as an investment is not a bad idea. Check out Conway Gittens’ story:

Audio – Kinross in the ‘Sweet Spot’

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In the M&A world, this is where you want to be.

Kinross Gold’s CEO Tye Burt said at the Reuters Global Mining and Steel Summit on Wednesday that as far as mergers and acquisitions go, his company is in a pretty good place — there are more deals hitting his desk, sellers are getting more motivated and Kinross, the third-largest of the Canadian gold miners, has the cash to do a little shopping.

While Burt did not expect to be party to one of those huge mega-deals, he did indicate the company was keeping its options open — and was listening for bargains.

Audio – A little less joy down the road for Joy Global

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Mining and construction equipment maker Joy Global actually had a pretty good week for itself.

The company released its first-quarter results last Wednesday, which topped Wall Street’s expectations and sent the shares up more than 15 percent.

Welcome to the 2009 Reuters Global Mining Summit

Prices for copper, zinc and aluminum have plummeted in the last four months as the global economic downturn cut demand from China and other developing countries who needed metals and steel to build up their infrastructure.

Mining companies who were hot last year and earning unprecedented profits until last September, have had to scramble to deal with the lower outlook by cutting costs, laying off workers, idling plants and reducing production.

Video – Steelmakers forge survival plan

As a global recession hits just about every industry, steelmakers too have felt the brunt, logging dramatic declines in demand.

Output for steel globally sank nearly 25 percent in January alone, with North America posting a more than 50 percent decline. Still analysts say the steel industry may be positioned to survive a recession.

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