Targeting opportunities in UAE

Dow Jones Indexes has opened its first office in the region in Dubai. While the office will promote all the company's indexes, attention is likely to be given to the Dow Jones Islamic Market Indexes, which were launched in 1999.

The Dubai office will target investment banks, asset managers, fund managers and exchanges across the region. Sumeet Nihalani, senior director for Asia Pacific and Middle East, spoke to Emirates Business about what Dow Jones Indexes hopes to achieve from its presences in the region and the general outlook for Islamic banking.

Why has Dow Jones Indexes decided now is the time to establish a new presence in the Middle East?

We have been in the Islamic market and business index for a long time. But we have been growing our business with the licensees in the Middle East. As this business grew, it was important to have somebody in terms of proximity to be able to efficiently and in a timely manner to serve and support potential clients.

We have seen a lot of growth in the Middle East – mainly in GCC countries. And we have seen a lot of growth in the Middle East around Islamic index opportunities. It is important to have somebody on the ground to see what are the emerging trends. And to see how we can fit our competence with local knowledge and understanding to the local market place to create more products or different products.

What are the challenges facing Islamic financial banking?

I would like to use the word opportunities rather than challenges. I do think there are a number of opportunities. As a lot of banking and financial professionals engage themselves with Islamic finance activities, they are able to create new products and services that can be [useful] across regions.

And they can address the different aspects of Islamic finance in insurance, mortgages, etc. Our office has given us a good opportunity to contribute to this and bring our global experience to Dubai and the region in similar services in this market place. Also, the members of our Sharia board who provide Islamic Finance expertise to Dow Jones Indexes and provide the Sharia rules that we apply to our index components are located here.

Critics have said there is a lack of expertise in Islamic banking? Do you agree?

We are index providers. We have seen the change and evolution in the Islamic finance industry and seen the development of standards and the conversion of these standards. People are trying to unify the standards.

What common ground do you see among the different Middle Eastern countries that Dow Jones will analyse from its office in Dubai?

There are common demographics. There are common investment appetites. The level of wealth may vary and the outlook may vary. You may have a larger market like Saudi Arabia that is looking for being a regional hub, while the UAE is looking to be a global hub. When we see investment appetites vary to certain extents, we have to create compatible solutions. You see outward investing in Saudi Arabia. You see real estate investment opportunities in the UAE.

You see some of the international companies from the UAE are going out to India where they are using Dubai as a hub. We have to create localised products that suit individual needs at the same time. You have to create broader products that suit regional needs. For example, there are bankers who look for GCC vs. Saudi Arabia, GCC including Saudi Arabia, or Middle East vs. North Africa.

To what extent has Islamic banking been affected by the downturn in global markets and the credit crunch?

If you look at the credit crunch worldwide, the Islamic Finance Business has by a large extent escaped the effect. It may have felt it, but it was not absorbed.

Do you see non-Muslims engaging in Islamic finance?

Why not? We have created an Islamic market index for mainland China for companies that are listed on the Hong Kong Stock Exchange. And a bank in Hong Kong had issued an Islamic fund that was received positively by the local market in China because the index was outperforming. For them, it was not about Islamic or not, but about the revenues and protection. So, even people who are neither Arabs nor Muslims are starting to buy into an Islamic fund.

PROFILE: Sumeet Nihalani Senior director for Asia Pacific and Middle East, Dow Jones Indexes
Nihalani manages the Asia Pacific and Middle East sales teams and also heads Dow Jones Indexes growing Islamic index business globally. He has more than 20 years of sales experience and has been with Dow Jones & Co since 2001. He recently managed the sales operations for Dow Jones Newswires and Factiva in South East Asia and South Asia.

Prior to his role at Dow Jones & Co, Nihalani held similar sales and marketing skills positions in India. He received his honours degree in economics from the University of Delhi in India.