(Ed note: I’m supposed to be on holiday, and I promised myself no finance blogging while I’m away. But this was in my queue from Friday, and I’m sitting at SFO with an hour-and-a-half until my flight – so here you go.)
This Reuters article caught my eye on Friday. This fund dude at Prudential seems to think he’s onto the Next Big Thing:
A large Muslim population and growing wealth provide a ready retail Islamic banking market in China, a senior executive of Prudential’s (PRU.L) Kuala Lumpur-based fund management unit said.
[…] Islamic banks are touting wheat-based deposit products and metal-based funds as ethical investments to appeal to investors burnt by the recent conventional banking crisis.
When they say “wheat-based deposit products”, I’m guessing they either mean “sale and repurchase of a bunch of wheat” (which is a completely legit Islamic banking product, even though it’s obviously a secured loan, and interest-bearing loans are not legit), or something like this Maybank product, which is a structured deposit linked to wheat futures. Probably the latter.
Would it be wrong to say that structured deposits with embedded bets on wheat futures are not even remotely appropriate for retail investors?
[…] “If Islamic finance can tap Muslims, especially in Xinjiang, then there will be a huge potential for the Islamic space in China,” he said in an interview.
Xinjiang has a per capita GDP of about $2,000. How much money will your average Xinjianger be able to invest in these whizbang wheat-based deposit products?