What’s going on in the world this week? IFN brings you a selection of important, relevant or downright interesting economic, global and regional events, issues and trends that have the potential to affect the Islamic finance industry.
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Malaysian government wealth fund 1 Malaysia Development (1MDB), which has interests in Abu Dhabi and Saudi Arabia, could list a US$3 billion stock market listing of its power assets on the KL stock exchange as early as next year. Half of the funds would be used to pay down debts (currently estimated at over US$13 billion and representing a concerning liability for the government), with the rest earmarked for expansion.
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Federal Reserve agrees to end third round of quantitative easing, triggering US dollar rally and decline in treasury bonds and gold prices.
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Asian stock markets fall on the back of Fed news, based on concerns of capital outflows from emerging economies as liquidity from QE contracts. Fears that developing world growth could weaken.
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Oil price slide is positive for new Indonesian president, as it could pave the way for a less painful reduction in energy subsidies, which currently absorb almost 20% of the state budget.
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Saudi businessman Sheikh Mohamed Bin Issa Al Jaber sues Barclays for US$10 billion, with accusations that the bank acted “corruptly” to further its own interests, damaging his property groups MBI International and Jadawel International. The lawsuit alleges that the bank made a secret agreement with the Saudi government over lease payments due on two military complexes built by Jadawel in 1999, “in order to obtain for itself a rare and lucrative license to conduct banking in Saudi Arabia”. Barclays is also under investigation by the US Department of Justice regarding an alleged violation of anti-bribery laws regarding payments made to Al Obayya, a company associated with Prince Turki bin Abdullah bin Abdel Aziz, the son of King Abdullah.
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OPEC disagrees with US forecasts, to predict that up to 50% of shale production could be at risk if the price of crude oil remains around $85 a barrel. However, impact will not be felt until next year as US producers have already hedged against low oil prices. Banks such as Goldman Sachs have asserted that global oil prices will only stabilize if US shale output is limited.
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Global bankruptcy law back on the cards after 124 countries voted in favor of considering a legal framework for restructuring the debt of bankrupt sovereigns at the UN General Assembly last month. The 11 countries opposing the plan included the US, UK, Israel, Germany, Czech Republic, Canada, Australia, Japan, Finland, Ireland and Hungary. A working paper is expected towards the end of 2015.