DUBAI: The Islamic unit of HSBC plans to grow internationally through the launch of the industry's first Islamic exchange-traded fund (ETF) and by a further expansion into Bangladesh within the next six months.
In an interview, the unit's deputy chief executive said its first Islamic ETF is expected to launch in the Gulf in the fourth quarter to address a growing demand among customers seeking exposure to the Middle East.
"Institutional investors recognise that the Middle East as an emerging market is something they'd like exposure to," Razi Fakih said yesterday.
"ETFs allow them a greater access to this market."
Fakih said he expects ETFs will form up to 10 per cent of the Islamic funds market in the next five years.
While Islamic funds have struggled in recent years, experts say the industry will see increasing demand as more diverse products and asset classes are offered to Muslim investors.
But Fakih said the industry is positioned for strong growth particularly in the Middle East and Asia.
After a slowdown in Islamic bond issuance in the first nine months of the year, Fakih said Islamic debt markets are starting to reopen, boding well for HSBC Amanah's outlook.
As the global market opens up, Fakih said he saw increased opportunity for expansion in Bangladesh, where HSBC Amanah already has a presence but plans to significantly widen the scope of its services.
"Bangladesh is a market that HSBC continues to look at ... Bangladesh is a much bigger presence than we currently have in southeast Asia," he said.