http://www.fortwayne.com/mld/journalgazette/business/15883988.htm
Investors tap Islam Adjust to be 'Shariah compliant' By Joshua Freed Associated Press MINNEAPOLIS -- When Caribou Coffee went public last year, sharp-eyed investors noticed some unusual promises in its prospectus. Caribou, the nation's second-largest coffeehouse chain, said it would never sell pork or porn. It wouldn't charge or receive interest, either. By following financial rules that are part of the Islamic code called Shariah, Caribou is among a small but growing list of Western businesses looking to make themselves as attractive as possible to Muslim investors. Some, such as Caribou, are motivated by principle, while others see Muslim investors as an attractive new source of money. Mideastern investors flush with oil profits are looking for new places to invest, and American Muslims are looking to invest in a way that doesn't conflict with their faith. "There's a bunch of Islamic investors who are prohibited from a lot of regular investments, so a lot of money is sitting in cash not earning anything at all," said Khalid Howladar, a vice president for Middle Eastern and Islamic Structured Finance with Moody's Investors Service in London. Dow Jones has created an Islamic investing index. A Texas company issued almost $166 million in Shariah-compliant bonds to finance natural gas operations in the Gulf of Mexico. And the German state of Saxony-Anhalt issued a floating-rate 100-million euro note -- managed by Citigroup -- that followed Shariah rules. Islamic financial rules come from passages in the Quran that prohibit "riba" -- making money from money. Generally, that means not paying or collecting interest, though some scholars say only abusively high interest rates are prohibited. Other prohibitions are more moral than financial, such as a ban on selling pork. While many Muslims have invested conventionally in the West for years, some did so because they had few alternatives. Moazzam Ahmed, a software engineer from Carrollton, Texas, has no car loans. Credit card charges go on a zero-percent card or get paid off at the end of every month. And he's got a home mortgage that is a lease-buyback arrangement, rather than an interest-bearing loan, a frequent arrangement among Muslims looking to buy homes while obeying Shariah. But he fretted about his conventional retirement investments until four years ago, when he discovered the Saturna funds. "As soon as I found out about it I switched everything to it," he said. "I would have loved to do it from Day One, but it wasn't available, or at least I didn't know about it," he said. He said his returns have been as good as, or better than, more conventional investments he could have made. The Glenmary Research Center of Nashville, Tenn., estimated that there were about 1.6 million Muslims in the United States in 2000, the first time it gathered information on Islam as part of the census of religious groups it carries out every 10 years. Eric Meyer, who runs a Connecticut-based hedge fund called Shariah Capital, says Western banks and financial institutions need to have Shariah-compliant products or risk losing market share. "There is a younger generation of Muslims who grew up during the last 20 to 30 years that have a reawakened sense of nationalism and religious pride that motivates them to invest according to their faith," he said. But in Western finance, it takes some creativity to avoid earning or paying interest. To borrow money, Shariah-compliant companies often pledge the lender a share of the profits from an asset instead of interest. Investors who need to earn a shorter-term return can contract to buy, say, $100 of copper today, and simultaneously pledge to sell copper in 90 days for, say, $103. +++ -------------------------- Want to discuss this topic? Head on over to our discussion list, [EMAIL PROTECTED] -------------------------- Brooks Isoldi, editor [EMAIL PROTECTED] http://www.intellnet.org Post message: osint@yahoogroups.com Subscribe: [EMAIL PROTECTED] Unsubscribe: [EMAIL PROTECTED] *** FAIR USE NOTICE. This message contains copyrighted material whose use has not been specifically authorized by the copyright owner. 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