COVER STORY

The Rise of Islamic Finance

-- Amit Singh Sisodiya Sanjoy De and Moghul Imrana

The Middle East especially Arabia which reminds people of the ancient caravans of camels winding through the never-ending desert sands the legendary sagas of the Arabian Nights the wizardry of Aladdin and the adventurous tales of "Ali Baba and the 40 Thieves" have so far been regarded only as a fabled trade entrepot between Europe and Asia. However of late things have changed a lot as a modern form of Islamic trade finance blossoms. And as world trade is accelerating in the region where oil exporting countries are enjoying strong economic growth and importing more goods and services the region is gradually transforming into a financial hotspot. And sukuk the Shari'ah-compliant Islamic bond is leading the show with its new-found global appeal.

© 2007 IUP . All Rights Reserved

BY INVITATION

High Oil Prices : Implications for Global Economy

-- Karin Kneissl and Pawel Kowalewski

The importance of energy is not new; it is only in the process of being rediscovered over and over again. It is oil which constitutes the major part of the global energy-mix. Oil like most commodities is traded in the US Dollar (USD). The value of the USD and oil prices tend to influence each other. The main aim of this article is to assess the consequences of the latest upward trend in oil prices and the way it impacts the world economy and international monetary system.

© 2007 IUP . All Rights Reserved

BY INVITATION

Sukuk : A Global Trend

-- Jamal Abbas Zaidi

The sukuk model is effectively a derivation of the conventional securitization process where a special purpose vehicle acquires control of the originator's real assets and issues financial claims on the associated cash flows.

© 2007 IUP . All Rights Reserved

INTERNATIONAL

Global Savings Glut: Pros and Cons

-- John Freebairn

One result of the boost to global savings over the past decade has been the downward pressure on the real rate of interest. The freeing up of international trade in goods and services and of capital has contributed to the expansion of international trade both of goods and services and capital to the mutual benefit of buyers and sellers. The growth of global savings is matched by the growth in global investment. Some countries have become larger net savers and effectively are selling securities today in exchange for goods and services in the future.

© 2007 IUP . All Rights Reserved

INTERNATIONAL

China's Tech Prowess : Threat or Concern?

-- N Janardhan Rao and Sridevi

China is fast becoming a technology superpower and is on its way to prove its prominence worldwide. It is both posing challenges and creating opportunities to the rest of the world.

© 2007 IUP . All Rights Reserved

INTERNATIONAL

Russian Economy : Beyond Oil and Gas

-- N Janardhan Rao and V Ratna

The current investment boom is transforming the country's stagnating industry and putting the country's economic growth on the right track. Russia is enjoying its longest period of sustained growth for de cades. The growth is no longer driven by traditional oil and gas industries. Economic growth hit a six-year high of 7.9% Year-on-Year (YoY) in the first quarter fueled by strong growth in construction manufacturing and trade. The ongoing investment boom is powering the economic growth. For instance according to estimates from the Ministry of Economic Development and Trade fixed capital investment soared by 20.1% YoY in January-March 2007 compared with just 5.7% growth during the same period in the previous year.

© 2007 IUP . All Rights Reserved

CORPORATE STRATEGY

Microsoft vs. Google : The Battle for Internet Supremacy

-- Amit Singh Sisodiya and Neha Naithani

Can the much ambitious acquisition of aQuantive help Microsoft fight Google's domination of Internet advertising better? On May 18 2007 Microsoft took the company's advertising platform to a new level by acquiring aQuantive an online digital advertising company for $6 bn which is also the Redmond giant's biggest acquisition bid ever. With this acquisition it has raised the hope of a renewed rivalry with Google despite skeptics thinking that it will be difficult for it to dethrone the search engine titan. Nevertheless the acquisition can help the software giant carve out some serious territory in online advertising.

© 2007 IUP . All Rights Reserved

CORPORATE STRATEGY

Cadbury Schweppes : Beverages on Block

-- Amit Singh Sisodiya and P Kavitha

To concentrate on its core business of confectioneries Cadbury Schweppes the UK major in an ambitious restructuring drive is spinning off its American beverages business into a separate entity.

© 2007 IUP . All Rights Reserved

MONETARY MUSINGS

Saga of US Subprime Loans: Lessons for India

-- GRK Murty

Effective monitoring is sine qua non for stability in financial markets which again is essential for economic growth. Reading a feature on the US subprime lending mess in a recent issue of the Financial Times that narrated how a small company in California offered services that can show a low credit-score borrower as an `independent contractor' on its pay roll and also provide a payslip as `proof' for a fee of $50 and give a glowing reference about him to the lender for an additional fee of $25-all to enable the low-rated home loan seeker to avail the loan one wonders if American borrowers are in anyway different from their counterparts in India.

© 2007 IUP . All Rights Reserved

INDUSTRY

Animation Industry : Set for the Giant Leap

-- N Janardhan Rao and B Suma

Despite growing concerns India's animation sector is witnessing a major boom. After BPO and KPO animation outsourcing is gearing to channel millions of dollars into the country.

© 2007 IUP . All Rights Reserved

BUSINESS ENVIRONMENT

Private Banking in Asia : Problem of Plenty!

-- Amit Singh Sisodiya and Sanjay De

A growing millionaire population is fast turning Asia into a red hot banking spot. Though Switzerland has so far been the global wealth management hub the majority of the private bankers in Europe believe that Singapore will overtake Switzerland within two years as the world's most important growth center of private banking and wealth management. In fact it is not only Singapore with its congenial financial ambience but the entire Asia now poses a tempting business opportunity for the global private bankers like never before.

© 2007 IUP . All Rights Reserved

BUSINESS ENVIRONMENT

Factoring Market : Mounting Prospects

-- N Janardhan Rao and Sridevi

India's ever-increasing openness to trade is amplifying opportunities for the factoring services. In today's competitive markets it is no longer a cakewalk for any corporate to hold and sustain its business as it is often exposed to a gamut of risks. It's all the more difficult for a young and upcoming enterprise that needs enough financial muscles to confront contingencies. A steady stream of liquid cash is the lifeblood for any business house for which they usually depend on banks and financial institutions.

© 2007 IUP . All Rights Reserved

BUSINESS ENVIRONMENT

Shareholder Activism : For Better or Worse?

-- Amit Singh Sisodiya and P Kavitha

A new breed of investors promises to take corporate boardrooms to task. Or is it just a flight of fancy for some ambitious big-ticket investors? On June 18 when Yahoo! announced the exit of its CEO Terry Semel along with some other top officials it looked like any other instance of a high-profile exit; however it was not. The change in leadership was not a routine transition; rather it was a forced event courtesy shareholder activism a new phenomenon.

© 2007 IUP . All Rights Reserved

BUSINESS ENVIRONMENT

FDI in India : Weeding out Threats

-- R Venkatesan Iyengar

The recently released discussion paper prepared by a committee of secretaries on the National Security Exception Bill which is yet to be tabled in the Parliament has stirred up a hornet's nest. The discussion paper on the Bill which is intended to provide a suitable mechanism to review and restrict Foreign Direct Investment (FDI) that might pose a threat to national security has come up with a proposal to examine FDI applications on a sector-wise rather than a country-wise basis to assess their threat perception to national security.

© 2007 IUP . All Rights Reserved

CURRENCY

Currency Futures : In the Offing?

-- Y Bala Bharathi

It's no exaggeration that the recent episode of phenomenal rise in the value of Indian rupee has sent positive reverberations across the world about the growing strength of the Indian economy as well as its underlying currency the rupee. Adding to the euphoria of Indian growth story its currency has gained 10% already this year from 15% last July. Interestingly the currency which nosedived to a three-year low of Rs. 47.04 per dollar in July 2006 hit a nine-year high of Rs. 40.20 in July 2007 and has been currently hovering around Rs. 40-42 per dollar.

© 2007 IUP . All Rights Reserved

APOLITICAL

ECBs What the Latest Restrictions Mean

-- grk

Market reactions aside what is more important here are the restrictions per se and their impact on the macroeconomic fundamentals. As a result of the restrictions imposed companies can now raise ECBs for rupee expenditure only up to $20 mn that too with the prior approval of the Reserve Bank of India. Corporates are also required to park such borrowings overseas till the rupee expenditure materializes.

© 2007 IUP . All Rights Reserved

ARTS AND ARTISTS

Monumental Expressions

-- Dr. PG Nirmala

Roman art represents a continuation of Greek tradition. But unlike the Greeks who built temples of great beauty the ancient Romans with their arches and vaults built grandiose and ostentatious public buildings. The genius of the Romans found its most powerful expression in the field of architecture where they displayed remarkable skill and science. Their temples amphitheaters baths roads bridges and aqueducts proclaim the grandeur that was Rome.

© 2007 IUP . All Rights Reserved

ROUND TABLE

Global Savings Glut : Is It Desirable?

-- Sanjoy De

The world has witnessed an unprecedented glut of savings in recent years. This has been driven mainly by surpluses of the oil-producing countries and China and Japan. This has led to an increased global imbalance. China has invested $200 mn though a tiny fraction of its $1.2 tn of reserves in Blackstone a US private equity company. More such equity investments will surely follow. India OPEC members and other developing countries with large foreign exchange reserves are now seriously considering of emulating China's strategy. Also this saving is funding an increasing number of M&As in the world

© 2007 IUP . All Rights Reserved