Mohammad Faiz Azmi asked the panelists on the investor classes and the kind of investments they are seeking. Gerald Ambrose said Aberdeen is a conventional long-term fund manager and most of its clients consist of pension funds. The company also manages a few Shariah funds for Middle East unit holders.

Ambrose said Malaysia is a good place to start for the company as the assistance that has been provided here has been valuable and that it will continue to manage funds using the investment process that it has been using for the past 30 years.

BNP Paribas has been in the Islamic space since 1985 and has managed some Islamic funds. In 2006, it came out with a Shariah compliant equity fund and later, a Shariah compliant ETF. It was also the technical adviser for MyETF, Asia’s first Shariah compliant ETF.

Hisham Abdul Rahim said BNP Paribas hopes to introduce a few more Islamic funds to the market by the end of 2008. These include a currency fund and an Islamic income fund which will invest in Sukuk Murabahah.

Meanwhile, private equity firm NBD Sana Capital is in search of exciting companies which offers future growth.

The firm takes a strategic stake in these companies, provides assistance for the growth of companies within two to three years and later sells them. Abrar Mir said there is not much conflict between Shariah compliant and private equity which starts in the emergence of Islamic finance. According to him, there is a lack of leverage in the entire private equity industry.

Nor Azamin Salleh said HWANGDBS Investment Management is in the process of setting up an Islamic asset management house. According to Nor Azamin, the new subsidiary which will focus on Southeast Asia and China, will market products from these countries globally, especially targeting the Middle East.

Rating is a secondary issue as most of the global Sukuk issued in the Middle East are not rated. However, these Sukuk are fully subscribed.

However, due to the increasing number of sophisticated investors in the Middle East and the rising demand for rated products from these investors, the Islamic asset management house will introduce these types of products to Middle East investors.

Responding to Faiz’s question on the expectations from the Middle East, Abrar said the level of sophistication among investors in the Middle East has increased dramatically particularly in the area of Shariah compliance. Institutions in the Middle East use a third party due diligence institution to analyze whether everything is managed in a Shariah compliant manner before making the decision to invest. As the investors in the Middle East are also becoming more concerned about leverage, Abrar said private equity could be successful as it is Shariah compliant and is not allowed to borrow as much as the conventional funds.

Faiz then asked Hisham to comment on the high rate of returns in the Middle East. Hisham said the rate depends on the asset class. He said Middle East investors are also looking at diversification and have asked for Asian equities.

They are also exploring the Islamic income fund, which is similar to Sukuk Murabahah, and money market type funds which both may not offer high yield but allow the diversification that they want so that they can combine with high yield, reduce their volatility and still give them appropriate returns.

Abrar said the environment in the Middle East is unique as investors can see returns of about 25% for private equity and yet sometimes it might still not be good enough for many of the Middle East investors.

Nor Azamin said the high returns in the Middle East market will not last forever and there will come a time when Middle East investors look to other regions for consistent returns. He said there is demand from the Middle East for products from Vietnam and China. Middle East investors are seeking products that are not widely offered to that region and are willing to take high risk. However, there are not many products coming from China and Vietnam.

Abrar thinks Vietnam will continue to see opportunities as Middle East investors are very proactive. He added that Malaysia is also important to the Middle East and a lot of its investors look up to Malaysia. There is a strong desire in the institutions and high net worth individuals in the Middle East to build bridges in Malaysia.