Niveshak March Issue

Friday, March 20, 2009 , Posted by Team Niveshak at Friday, March 20, 2009

It has often been seen that the world of finance reinvents itself once every decade. During the last five years we saw the world of high street finance pass through one of its highest peaks building a regime of unimaginable optimism before disgracefully fading into the oblivion. We saw the emergence of new economies, evolution of new structured financial products, unprecedented rise of stock markets into stratospheric levels, rise of commodity prices, high growth of international trade and most importantly an air of positive sentiments prevailed all over the world. This fairy tale ended with a catastrophe wiping out the most formidable names of the BFSI sector. In the mean time, the Islamic banking industry was being redefined and reinvented as banks, the world over. Assets of financial institutions offering Islamic products and services have soared by almost 25% year-on-year over the past decade, to about USD 300 billion today and projected to reach USD 1 trillion by 2013. Governments and central banks have taken a lead in supervising Islamic banks, encouraging their growth and have passed Islamic banking and insurance laws in their countries. 

In our last edition we had covered the emergence of such a new financial institution – The Sovereign Wealth Funds. The current cover story aims to provide a comprehensive overview of the fundamentals on which Islamic Banking works, issues & concerns surrounding it and try to find if it can respond to the opportunities presented by the current downturn with its range of Shariah-compliant products. Today, conventional banks in non-Muslim countries too cannot afford to ignore the growing demand for Shariah-compliant products. We shall try to answer if it will be beneficial to leverage the wisdom of Shariah scholars who have identified financial solutions that conform to Islamic ethics, and the contractual mechanisms that bind them. 

Apart from this we shall also cover an issue that threatened the credibility of corporate India not so long ago- The Satyam Fiasco. We will try to understand and appreciate the role of Debt  financing in corporate structures, leveraged buyouts as well as in running an economy as huge as India at such a fast pace. Our articles will address issues concerning Debt Deflation, the future of leveraged buyouts owing to the current recession and the difficulties faced for the institutionalization of the World Trade Organization. 

As the world is struggling to find tools & techniques for investing in the current times, we see this as a golden opportunity for picking up gems at throwaway prices. We present to you-“Value Investing”, the tool that has largely been responsible in making Warren Buffet the “Oracle of Omaha” and the most respected investor of the era. Introduced by Prof. Benjamin Graham in the book “The Intelligent Investor” in 1948, the concept of “Value Investing” is, till today, the most successful tool in long term investing. Hope you find this a useful issue. 

Happy Investing. 

Team Niveshak

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