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Problems with your portfolio? Maybe you need help from a higher authority.

Thailand lures Middle East investment with companies free of pork, booze and usury

A Thai investor watches live market data on a monitor at a stockbrokers' office in central Bangkok. (Sukree Sukplang/Reuters)

BANGKOK — To court Muslim investors, Thailand’s business world is showcasing firms the prophet Mohammed could condone.

The Stock Exchange of Thailand, currently in a tailspin, is hoping to attract moneyed Muslims in the Middle East and in its own backyard. Their pitch, however, doesn’t just rely on promises of high returns. These firms, the exchange says, will benefit Muslims’ bottom line — and their conscience as well.

Debuting next month, Thailand’s “Sharia Index” is a selection of firms vetted by scholars who can navigate both the Qur’an and a balance sheet. Each has been deemed free from violations of Sharia, or Islamic holy law. Companies connected to pork, tobacco, booze — or even the defense industry — are immediately disqualified.

Then comes the hard part. Real expertise is needed to weed out businesses that violate the Sharia’s prohibition on excessive interest. Known as “riba” in the Qur’an, it’s comparable to the Judeo-Christian concept of “usury.” Avoiding interest is the foundation of Islamic financing.

“Dabbling with ‘riba’ is a large sin,” said Habhajan Singh, who tracks Islamic finance trends for The Malaysian Reserve newspaper, where he is associate editor. “For Muslims to partake in the modern financial world, they have to remove that element of interest.” The vetting process eliminates any business that profits from interest — such as banks — in favor of companies profiting from concrete assets.

The idea has made its way into the modern financial world. Thailand’s stock exchange follows exchanges in Singapore and Hong Kong in offering an Islam-vetted stock index. Its new Sharia index will be calculated by the U.K.-based FTSE group.

Santi Kiranand, who heads market development for Thailand’s stock exchange, said the Sharia index is mostly a push for more wealthy Middle East investors. But it also opens doors for investors in Muslim-majority Malaysia and Indonesia. Though predominately Buddhist, Thailand also is home to many Muslims, though most are concentrated in poorer southern provinces along Malaysia’s border.

“Even though we have a lot of Muslims, and they should be our targets too, we have to diversify our investor base into those other regions of the world,” Santi said. “The Middle East doesn’t invest enough in our capital market.”

Santi and a small team are currently planning a “road show” through the Middle Eastern financial centers Qatar, Abu Dhabi and Dubai, he said.

Both the western and east Asian business worlds have recently become more cognizant of Islamic financial principles, said Paul Hoff, managing director of FTSE Asia Pacific. The awareness broadened, he said, after the Sept. 11 terrorist attacks and the larger trend towards globalization.

More than just assuaging consciences of Middle East investors, the Islam-guided indices also perform admirably, he said. Proponents of Islamic finance note that Sharia indices can’t include banks or any high-risk, debt-leveraging sectors — which many blame for spurring the current global financial downturn.

http://www.globalpost.com/dispatch/thailand/090304/problems-your-portfolio-maybe-you-need-help-higher-authority