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The Green Crescent on Stock Horizons (Part 1)

10 January 2008 - Features - Editor

The stock market is a part of American business culture. It was in the United States that the practice of raising and offering funds for commercial and industrial was born in our stock exchanges. There may have been earlier forms of money lending that some historians claim as precursors of a stock trading ring, but the modern world has largely copied the United States in establishing national stock trading systems. The United Kingdom has many credits in terms of representative democracy, systems of justice, and bureaucracy, but the United States can take pride in being the prime mover of the stock market phenomenon.

Leadership is never free from threats of challengers: there is a distinctly Islamic flavor of financial planning on the global stage. Change is never easy to accept, and all notions of domination from parts of the global environment that have security overtones are bound to be met with huge dollops of suspicion by the establishment. Sharia law has unpleasant connotations in western media, so thoughts of Islamic values pervading the stock exchange may not always be welcome. However, there are two reasons for predicting that Islamic influences in stock investing will not go away. The first factor is that dollar reserves with oil-rich Islamic countries make them powerful stock investors. Secondly, Islamic finance has some sound management principles worth following.

Stock Price and Federal Rate Links

Business management studies tell us that marketing, manufacturing, human resources, and logistics, all have powerful and equal influences on profits and growth. Finance is integral to the management of corporate resources, but it is not a comprehensive strength on its own. Cash without customers, products, and services, is idle and therefore useless! Even within the field of finance, interest cost is just one amongst a host of parameters for business excellence. Why then are the stock price and the federal rate so inextricably linked? Moreover, why do Asian markets react so violently to every statement by a US Federal Reserve Chair Person?

Islamic finance is a slap in the face of interest rate based stock investing. Why can executives not use increases in the costs of funds as occasions to improve efficiencies and productivity levels? What about the practice in India of making funds available for the small and underprivileged at special rates? Why do financial institutions have preferences over stock holders in terms of getting returns on capital? Should banks that have abused customer trust to sell sub prime loans, before discounting them to boot, be entitled to throw families out of homes?

Stock Market Oases of Islam

Islam has strong relationships with Saudi Arabia and the greater Middle East region in most western eyes. The King and his extended family in Riyadh are our most trusted gasoline suppliers, and great customers for luxury brands as well. We love our Sheikhs and long to shop in Dubai, if not own extravagant condominiums in this new Las Vegas! Now that is all very well in an environment which celebrates individual capital accumulation, but the oil rich Muslim countries are not sole repositories of Islamic banking and finance achievements. Malaysia, though it is happy with a low profile in the New York Times and its ilk, is the real center of Islamic finance.

The Green Crescent on Stock Horizons (Part 2)

 


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