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Khaleej Times
39 minutes ago
- Khaleej Times
Diamonds enter the financial spotlight: A new era for Islamic finance and global trading
For centuries, diamonds have symbolised luxury and rarity. Now, a pioneering financial technology is transforming them into something far more significant: a regulated, tradable commodity with the potential to reshape Islamic finance and global investment. At the heart of this innovation lies a powerful realization. While gold and silver have long served as tangible assets for trading and wealth preservation, natural diamonds, despite representing a 1.2 trillion-dollar global resource, have remained largely inaccessible to investors due to their unique and varied characteristics. Unlike other commodities, each diamond is slightly different in quality and composition, preventing the creation of a transparent, universal pricing structure. 'Natural diamonds are the only major natural resource that global investors couldn't trade transparently,' explains Cormac Kinney, Founder and CEO of Diamond Standard. 'Each stone varies in carat, clarity and color, which has made standardization nearly impossible. But through computer science and quantitative trading, we developed a method to group diamonds into standardized, fungible units, all having the same value.' The result is a new form of investment-grade diamond bar, composed of stones carefully matched for value equivalence. These bars make it possible to trade diamonds in a manner similar to gold bullion, reliably, consistently and at scale. For Islamic finance in particular, the implications are substantial. Unlike metals such as copper, which are cumbersome and expensive to store and secure, diamond-based commodities are easier to custody and settle. This makes them an ideal asset for Murabaha-based financial instruments. Each diamond bar includes a wireless computer chip that allows custodians and financial institutions to verify the asset's presence and authenticity instantly. This chip issues a blockchain-based digital token that represents legal ownership of the physical commodity. The token itself is tradeable and can even be subdivided into micro-units called 'Carats,' each fully backed by the underlying diamonds. This system ensures a high level of flexibility, transparency and security in commodity trading. The launch of this innovation comes at a pivotal time. Recent regulatory changes in Islamic finance have restricted the use of derivatives such as options and warrants in Murabaha structures, pushing banks to seek new Shariah-compliant alternatives. 'All major Islamic banks are now looking for compliant substitutes for physical settlement,' says Kinney. 'We're not changing the process. We're simply offering a better, more cost-efficient commodity. That's why banks and service providers have responded with such strong interest.' Looking ahead, Kinney envisions a much larger role for diamonds in global finance. This includes their potential not only as a tradeable asset class but also as the foundation of a new digital currency. In a world increasingly interested in asset-backed digital systems, a diamond-backed currency could offer a Sharia-compliant and inflation-resistant alternative to cryptocurrencies. 'Many Islamic institutions reject speculative instruments like Bitcoin. But a digital currency backed by real, audited diamonds could provide stability and compliance in one package. It's a concept particularly attractive to BRICS countries and other diamond-producing nations,' adds Cormac Kinney. With global demand projected to reach 100 billion dollars across Islamic finance and digital currency applications, diamonds, once seen purely as symbols of wealth and luxury, may soon underpin a new chapter in financial history. No longer just ornamental, they could become a foundational asset in the evolving landscape of ethical, secure and innovative finance.
Arabian Business
2 hours ago
- Arabian Business
Saudi's ACWA Power's $1.9bn rights issue approved by shareholders
Saudi Arabia's ACWA Power has received shareholders' go-ahead for its SAR 7.1 billion (US$1.9 billion) rights issue. With SAR 5.28 billion (US$1.41 billion) to SAR 5.98 billion (US$1.59 billion) earmarked for financing current and future projects and up to SAR 1.41 billion (US$380 million) for mergers and acquisitions, this marks a key step in aggressively funding its expansion in renewable and clean energy projects. The company will offer approximately 33.93 million shares at SAR 210 (US$56) a piece. On Wednesday, ACWA's shares were trading at SAR 240, down 3.23 per cent. According to Bloomberg, ACWA has been one of the worst performers on Saudi Arabia's stock exchange in 2025, with shares down 40.6 per cent so far this year. It's high this year was on January 20, when it touched SAR 435.2. The company sees the rights issue as critical to its plan to boost annual project spending to as much as $2.5 billion as it seeks to triple assets under management by 2030. It's working to expand into countries like China, Malaysia and Turkey, and is also building new capacity at home as part of Saudi Arabia's drive to neutralise carbon emissions by pushing into solar, wind and green hydrogen. In February this year, ACWA Power bought power and water assets in Kuwait and Bahrain from France's Engie SA for US$693 million. It acquired stakes in three plants totalling more than 3 gigawatts of power capacity and 138 million gallons a day of desalination in Bahrain, as well as Engie's share of the 1.5-gigawatt Az Zour North project in Kuwait. For the first quarter of 2025, ACWA Power said its operating income before impairment losses and other expenses increased by 117 per cent to reach SAR 870 million (US$232 million), driven by higher development business and construction management services income. Net profit reached SAR 427 million (US$113.9 million) for the period, 44 per cent higher QoQ.
Khaleej Times
3 hours ago
- Khaleej Times
Weak dollar to unlock opportunities in emerging markets and global equities
With the US dollar at multi-year lows and expected to weaken further over the next six to 12 months, prospects are improving for emerging-market assets, a report showed on Wednesday. Standard Chartered's Global Market Outlook for the second half of 2025 projects a constructive but volatile environment for investors worldwide. In the United States, growth continues to be supported by resilient consumption and fiscal stimulus, though trade and policy uncertainty may temper momentum in the second half of the year. In Europe, fiscal easing increasingly offers support, but structural challenges persist while China's outlook is stabilising on the back of targeted stimulus and improving retail activity. Meanwhile, growth in India and ASEAN is expected to remain well-supported. 'We expect the US dollar to weaken over the next 6 to 12 months and have accordingly upgraded Asia (ex-Japan) equities and Emerging Market (EM) local-currency bonds to Overweight. Global equities also remain an overweight position across portfolios, supported by healthy earnings, easing trade tensions, and controlled inflation (so far),' the report said. Commenting on the report, Ayesha Abbas, managing director and head of affluent and wealth solutions, Europe, Middle East and Africa, and UAE at Standard Chartered, said: 'As global markets transition into a new phase, Middle East investors are well-positioned to capitalise on emerging opportunities. A weaker dollar historically supports returns across risk assets, particularly in emerging markets, which have long been core components of regional portfolios.' She added: 'This outlook underscores a critical moment for investors in the region. As the global environment adjusts to weak dollar dynamics, shifting trade policies, and diverging central bank actions, investors in the Middle East have an opportunity to reposition portfolios with greater international diversification. Asset classes such as emerging market bonds and equities across major regions (including non-US equities) are well-placed to help investors navigate volatility, capture income, and enhance portfolio resilience in today's shifting landscape.' In line with these themes, the report maintains a preference for USD-denominated bonds in the five to seven-year maturity range, citing them as the most attractive in terms of risk-adjusted returns, particularly as yields begin to ease from current levels. Meanwhile, developed market investment grade corporate bonds have been downgraded to Underweight due to tight yield premiums and slower inflows. Alternative investments are also in focus, with the bank highlighting gold as a core allocation, supported by strong central bank demand and its role as a diversifier when bonds offer less downside protection.
