Forex and Stock Investment

Optimists draw courage from the fact that the indices above the low points of January remained.  That will the beginning its of and trial of bottom formation and the chance on a recession reduce.  But the macro-economic facts point otherwise out. 

The mostly in the eye jumping was the trusting of entrepreneurs in the services sector.  This wanted to see in January the largest drop ever.  The level of the index is scarcely higher than after the attacks of 11 September.  There becomes sleepiness said that this index a less good predicting value has then that of the industry, but because the problems in the economy self this time especially in the house market and in the financial sector show, will that this sometimes otherwise want to can be.  Also other trust indicators sketch a town gloomier image, as the trusting under small entrepreneurs and the consumers confidence.  No improvement house market De house market want to see no single improvement.  On the contrary, the valleys of the sales and the prices its largest in the recent history.  The number of houses that is built is back on the level of beginning years ninety, but really stand it still too much houses for sale.  Overdue payments go up further.  It is even so that some buyers their house normally leave and the transferring at the bank.  In contrast till what in our country customary is, can tell the bank a possible rest debt not on the buyers.  With that are saddled banks thus with extra losses.  It is then also no wondrous that banks the mortgage conditions always further tighten up.  Credit crisis worsens appeared the conditions Banks for all loans at too edges.  But loans for commercial real estate stretch the crown.  More than 80% of all banks sharpens the conditions for these loans on.  This is alarming, since investments in commercial real estate supported in the third and fourth quarter of last year yet robust alleys and with that the growth.  Moreover here also (to) many money has been loaned against (to) favorable conditions.  If this collapses thus, what the high extent implies, then falls there prevent a pillar under the growth away.  Banks sharpen their conditions a few reasons on.  Firstly they do goes this always as the economic more badly.  The risk that loans are not refunded becomes after all larger.  Further banks have to provide now long not always sufficient capital new loans.  Many banks have to take Advantage of the past years special constructions opgezet the higher output on mortgage related bonds.  These constructions were held outside the balance.  Only now that mortgage related bonds many of their value have lost,
become love forced banks or more to take they still on the balance.  If they do not do will this, will that large reputation damage yield.  Also all loans that they have provides take-over purchases to finance and that actual had must become resold, stand yet on the balances of the banks.  This takes all possession of the capital of the banks, through which they provide can less new loans.  The credit crisis limits self thus not longer till the house sector.  Generous or heavy Or the recession there comes is already almost no question more.  A more important question is or will become one generous then well a heavy recession.  The model of credit facts growth appears to have had its longest time.  As humans self forced see their debts strongly to decrease, then can that easy lead till a heavy recession.  In that case step jumble each other restorative mechanisms in working.  The credit crisis turns then vigorously self away and drags the whole acabadabra of MBS-and, CDO, CDS-and, SIV et cetera with self with.  Profits come to stand under pressure and purses fall further away.   follow and that move the consumption prevent further under pressure.  Only so far it is not yet long.  I draw yet hope from the fact that heavy recessions or depressions in it lately always paired went with monetary authorities that too late or been wrong reacted.  What that the Fed all hesitance has concerned let sail.  Further supply adaptations played often a large role in heavy recessions.  On this moment low in proportions are the supplies till the sales. 

BNP Paribas has made related in the fourth quarter of last year 42 per cent less profit then a year before through redemptions at the credit crisis.  The net profit came from on more than 1 billion euro, reported the largest bank of France Wednesday. 

The figures come to the same thing with the temporary results that end of Januaries were announced. 

BNP Paribas was one of the first European banks that last year as consequence of problems on the American mortgage market robust redemptions had to report.  BNP Paribas wrote off in the fourth quarter in totally 898 million Euros.  With that is the bank less heavily hit then other banks as for instance UBS or its French rivals Crédit Agricole and Société Générale. 

Come up markets

Despite the profit decline in the fourth quarter posted BNP Paribas over whole 2007 a record profit of 7.8 billion euro, 7 per cent more than in 2006.  The total profits went with 11 per cent upwards to 31 billion euro, also a record.  The group is optimistic over the walking year, despite the defying economic climate and the exceptional volatility on the purses, according to senior official Baudouin Prot. 

BNP Paribas want to expand especially its presence in come up markets, as Brasil, China, India, the countries around the mediterranean Sea and eastern Europe.  The group want its earnings from come up countries within three year double until 15 per cent of the total. 

Market value

On the overripe in Paris stood the share BNP Paribas 0.4 per cent higher.  Since this year begin is the share gone down with 19 per cent in value.  The market value of BNP Paribas amounts to approximately 54 billion euro. 

BNP Paribas is named sleepiness to take as a candidate Société Générale over.  The French branch companion had to report last month a loss of almost 5 billion euro.  That is causes according to Société Générale through stupid investments of a single merchant.  End of January said to study BNP Paribas a possible bid on Société Générale. 

Senior official Prot had not to say Wednesday or will bring out BNP Paribas actively a bid on Société Générale.  According to Prot is the situation by the second to largest bank of France ,,complex”.  BNP Paribas did to incorporate in 1999 an in vain attempt Société Générale in. 

The American shares its Tuesday layer lift closed.  The profit of the beginning of the day evaporated because the oil price till above $100 alley. 

The Dow Jones Industrial Average shut Tuesday 0.09% layer on 12.337,22, the S&P500 fell furnished to end also 0.09% till 1,348.78 and the Nasdaq Composite Index 0.67% in on 2.306,20. 

The high oil price was favorably for shares in the oil sector.  Oil group ExxonMobil shut 1.9% higher, ConocoPhillips 1.8% and Chevron 1,4%. 

The rest of the market pleasantly had been hit less.  ‘How can the Fed say that inflation no problem will be, if the oil price on $100 per barrel stands?’ according to merchant Steve Sachs of Rydex Investments. 

After the fall back from the overripe Tuesday noon, see some market participants the increase of the morning as a wrong and count they on more losses in the coming days.  ‘I got already not about which we today rising were’, said Sachs.  ‘This sale wave is a reaction on the being missing from good news.’ 

On the other hand there not already too much value may become attached at the drop of Tuesday noon, since the volume layer was and many investors wait for yet.  ‘The more greater part of the market wait on the inflation figures and the Fed-minutes of Wednesday’, according to Sachs. 

Profit on the Asian purses gave only cause till optimism at the beginning of the trading day. 

Problems in the financial corner remain print however the markets, as Tuesday again on that by Credit Suisse, that a package mortgage effects for $2.85 billion .  Furthermore writes The Welled Street Journal that Lehman Brothers $1.3 billion must write off on its loans wallet in the commercial real estate sector. 

The quarter message of Bank-Mart wanted to receive with mixed enthusiasm through the market.  The net profit of the retailer ascended in the fourth quarter with 4%, but the profit outlook for the present quarter was under the market consensus.  The share won 0,4%. 

The Amsterdam Exchange Index is Tuesday higher closed.  In the course of the morning, the losses changed in profit became Welled became held, that after the noon also thanks to the positive opening of Street.  The AEX-index shut won ended 0.9% more high on 448.77 points, the Midkap 1.3% on 613.83 points and the Smallcap 0.3% more high on 621.53 points. 

"The overripe opening lower after alarming messages of financial institutions than a Barclays and Credit Suisse, but knew self here in the course of the morning from repairing and the profit in the noon fast to love", according to merchant Rethling

"A lower quarter profit by Barclays and a redemption by Credit Suisse saw to in the mornings yet for loss, just then Barclays with an accompanying explanation came, reacted the market positively through which the loss became changed in profit", said Raterink. 

Welled Street open after the long weekend in the green figures, supported through the profit in Asia.  Although the AEX after 15.00 hour what of its high point returned, carried the positive opening in the U.S. well by keeping of the profit on the Amsterdam purse. 

Corporate Deliberately pulled in the noon the attention on the Damrak.  The American sector companion Staples made to bring to be a bid of EUR7,25 known resoles per share from on the Amsterdam supplier of office articles.  This proposal values the business on EUR2,5 billion.  The share shut 39% higher. 

The merchant ups and downs further on the low volumes, that on it point that the private investors stay away from the market. 

State Bonds ended higher.  The Euro quoted 0.6% more high on $1,4740. 

The American stock markets jumped Tuesday morning , on the shoulders of profits in Asia.  After a long weekend walk investors that at the sideline stood again in.,.  Merchants and analysts are however careful over a possible positive trend fracture.  The Dow Jones Industrial Average (DJIA) state Tuesday around 16.45 hour 0.65% more high on 12,428.32 points, the S&P-500 rises 0.58% till 1,357.82 and the Nasdaq Composite Index climbs 0.52% unpleasant 2,333.79 points. 

"Azie stood higher, just as a number of European markets, and that sees to possible for an impulse upwards", said Clenched green field, merchant of Finance Investments.  "With the dollar and the house market on a low point, and the market below its top, will there possible investors want to get in on this level." 

With the openings profit of Tuesday, the market of plan appears to make round the losses of last week Thursday and Friday good.  Or the profit becomes held, is however yet uncertainty, noticed merchants on. 

"The market can at the end of the day its profit again hand in, if we in the meantime no positive news get", said green field. 

Also technical analysts are careful.  The profit of beginning last week, just as that of Tuesday, more would resemble a rally in a falling market then on the beginning of a rising market. 

The increase of the stock markets is supported behave through broadly profit for the energy sector, in reaction on a strong higher oil price, and for the defensive shares of the pharmaceutical sector.  Oil group ExxonMobil wins 2,7%, pharmaceutical Pfizer 1,2%. 

Credit Suisse is less in feature.  The share goes down more than 5%, after the business for $2.85 billion has written off on a package effects with pledge.  The disappointment becomes causes also through mistakes of merchants, stilt the Swiss bank, that 4.8% layer records. 

For the opening on Welled Street came retail giant Bank-Mart with quarter figures that investors little clarity gave.  After the net growth in profits of 4% in the fourth quarter of 2007 sees the business for the present quarter a profit that under the market expectation lies.  The share rises 1%. 

The European stock markets its Tuesday higher closed, supported through robust course profits at a number of insurers and Briton banks.  All financials did not it however just good, after an unexpected billions redemption through the Swiss bank giant Credit Suisse.  The EuroStoxx 50 ditch Tuesday 0.27% more high on 3.805,27.  The DAX-30 alley 0.50% till 7.002,29, the CAC-40 ended 0.49% more high on 4,885.83 and the FTSE-100 climbed 0.34% till 5.966,90. 

The redemption of $2.85 billion at structured credit products was according to Credit Suisse also the consequence of appreciations mistake by merchants, that suspended be before meanwhile.  Credit Suisse enclosed 6.6% lower and also UBS (-0,6%) and Societe General (-1,3%) furnished. 

The French insurer CNP Assurances shut however 6.8% higher, on take-over purchase speculation. 

The British bank Barclays shut 3.7% more high after results over 2007.  The net profit went down with 3%, as the market expected had approximately.  The increase of the redemptions fell however with, with GBP1,6 billion against GBP1,3 billion in the preceding quarter. 

"That is better than many had feared and good can become doorvertaald to other British banks, with name Royal Bank or Scotland, HBSC and Lloyds", said analyst Alex Miser of Collins Stewart.  The named British sector enjoyments ends respective 1,6%, 0.4% and 1.8% higher. 

Also the Dutch bank and insurer ING shut 2.3% higher, in run-up to the four quarter figures of Wednesday. 

Raw materials funds took advantage of the oil price, that strong stubborn till above $97 per barrel, while also the platinaprijs to new records ascended.  Mine building giant Rio Tinto shut shut 2.2% higher, the Italian energy group Eni 1.9% higher. 

Norsk Hydro lost however 34,7%, after the business posted a 27% layer net profit by a volume of trade drop of 7%.  The raw materials group know the meager results at lower aluminum price, weaker markets for distribution and raffinageactiviteiten and negative currency-effects. 

I recently saw a lot of stories in the news about so called Sharia banking. I knew it is banking under Muslim rules but I just looked up some more info today. So I stumbled across the a press release from the British Financial Services Authority. I think they sum it up for us non-experts :

Background and key principles

Under Islamic principles, Sharia law (prescribed in the Koran) defines the framework within which Muslims should conduct their lives.

The overarching principle of Islamic finance and banking products is that all forms of interest are forbidden. The Islamic financial model works on the basis of risk sharing. The customer and the bank share the risk of any investment on agreed terms, and divide any profits or losses between them. In addition, investments should only support practices that are not forbidden – trades in alcohol, betting and pornography are not allowed. Moreover, an Islamic banking institution is not permitted to lend to other banks at interest.

This we knew already

But why in Britain?

How Islamic banks fit into the current UK regulatory system

The FSA operates under a single piece of legislation that applies to all sectors, the Financial Services and Markets Act 2000.

The FSA’s policy towards Islamic banks, and indeed any new or innovative financial services company, can be summed up simply as "no obstacles, no special favours". We are keen to promote a level playing field between conventional and Islamic providers. One thing we are clear about is that we are a financial, not a religious, regulator.

One of the most important issues for the FSA is that of Islamic deposits. The UK legal definition of a deposit is: “a sum of money paid on terms under which it will be repaid either on demand or in circumstances agreed by the parties". In other words, money placed on deposit must be capital certain. For a simple non-interest bearing account there is no problem. The bank safeguards the customer’s money and returns it when the terms of the account require it to do so. However with a savings account there is a potential conflict between UK law, which requires capital certainty, and Sharia law, which requires the customer to accept the risk of a loss in order to have the possibility of a return.

Islamic banks resolve this problem by offering full repayment of the investment but informing the customer how much should be repayable to comply with the risk-sharing formulation. This allows customers to choose not to accept full repayment if their religious convictions dictate otherwise.

How can Muslim or non-Muslim benefit then?

Typical Islamic products

Some of the principal Islamic banking products are:

Commodity Murabaha - Islamic banks use this product to replace conventional inter-bank deposits. It involves the sale and subsequent re-purchase of a commodity (normally a base metal which is traded on a major exchange such as the London Metal Exchange). It is structured in such a way that it is essentially similar to a loan granted by the seller to the buyer. The difference in the sale and re-purchase price earns the seller a return which is broadly equivalent to interest.

Ijara – A leasing agreement in which the bank buys and then leases an asset (for example consumer durables or a property) to its customer for a specified rental over a specified period of time. The bank may have the right to adjust the rental charge in line with changes in the cost of finance. This method can be used for home buying purposes ("Islamic mortgages"). This usually entails the customer making capital payments in addition to the rental charge. The customer’s ownership in the property increases and the bank’s decreases by a similar amount with each such payment. Once all payments have been made, ownership of the property passes to the customer.

Murabaha - A form of credit that enables customers to make purchases without taking an interest bearing loan. The bank buys the goods for the customer and re-sells them to the customer on a deferred basis, adding an agreed profit margin. The customer then pays the sale price for the goods over installments, effectively obtaining credit without paying interest.

So what do you guys think? Leave a comment.