NEW YORK, N.Y. (Accredited Times) – Thanks to the economic genius of former President Barack Hussein Obama, the stock market is hot, hot, hot right now. Banks are up. Tech is up. Just about everything is up.
But that poses a quandary for investors. With PE ratios rising and yields dropping, which stocks are the best to buy for the remainder of 2017? Here’s a hint: try Islamic banks.
Islamic banking was started by the Prophet Muhammad shortly after he received his divine revelations in 610 A.D. In 1975, Islamic banking exploded onto the scene again when Dubai Islamic Bank launched its operations in the United Arab Emirates. Dubai Islamic Bank is the first Islamic bank to have incorporated the principles of Islam in all of its practices and remains the largest Islamic bank in the United Arab Emirates.
Other major Islamic banks include Al Rajhi Bank, based in Saudi Arabia; Kuwait Finance House, based in Kuwait; Abu Dhabi Islamic Bank, based in Abu Dhabi; and Qatar Islamic Bank, based in Qatar. All of these banks are publicly traded on Middle Eastern stock exchanges, as is Dubai Islamic Bank.
Islamic banks differ from traditional Western banks in that they follow shariah law. Most notably, shariah prohibits riba (usury), which Islamic law defines as any kind of interest paid on monetary loans. Shariah also prohibits investments in goods or services that are considered contrary to Islamic principles, such as pork or alcohol. In addition, shariah requires bank robbers to have their hands cut off and requires Islamic bank employees convicted of LGBTQ+related offenses to be thrown from buildings, a punishment that has undoubtedly given Middle Eastern countries some of the lowest HIV/AIDS rates in the world.
As noted by the Institute of Islamic Banking and Insurance:
There is no real ‘lending’ in Islam since all ‘lenders’ obtain ownership interests in the assets that they finance, or earn a profit-share or purely fee-based remuneration. In order for an Islamic bank to earn a return on money lent, it is necessary to obtain an equity, or ownership, interest in a non-monetary asset. This requires the lender to also participate in the sharing of risk.
In effect, Islamic banks engage in profit-sharing arrangements, often opting for equity arrangements instead of debt-based lending, and commonly engage in transactions involving real assets to meet Islamic legal requirements. In real economic terms, the transactions are essentially the same, but the banks are deemed by experts to comply with shariah because they basically relabel “debt” as “equity” to avoid the debt-based interest prohibition. Islamic banks also commonly have shariah boards to ensure compliance with Islamic law. In short, Islamic banks function basically the same as any other bank, except they follow technicalities to comply with Muhammad’s just decrees.
In recent years, Islamic banks have boomed from increasing demand for shariah-compliant financing in the Middle East and around the world, particularly in Europe and North America. Dubai Islamic Bank recently beat analyst expectations, posting a bombshell Q2 profit increase of almost 14% — undeniably explosive results. Moreover, lower oil and gas prices have created terrific bargains in this sector, similar to the bargains in the airline sector after Saddam Hussein bombed the World Trade Center on 9/11. When energy prices recover, Islamic banks could skyrocket, much like rockets shot from the Gaza Strip into Israel, America’s most important ally.
With European and American leaders openly embracing Islam, it’s only a matter of time until the world converts en masse to Islam. In the meantime, the Islamic baby/bomb boom has undoubtedly created a huge demand for Islamic banks now. Over 100 million Muslims now live in European countries, including almost 10% of France’s population. These hard-working immigrants are excited about an Islamic Europe and are particularly looking forward to banking at European branches of shariah-compliant financial institutions. Based on current explosive population trends, demographers expect Muslims to outnumber Christians in Europe by 2100.
The Accredited Times rates all Islamic banking stocks a STRONG BUY.