A real asset management approach for Islamic investment in containerships
Purpose – The purpose of this paper is to provide a real asset management investment appraisal of the performance of containerships as a primary segment within international shipping, to facilitate Islamic equity investment through a shipping fund. The objectives are to evaluate the risks and retu...
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my.iium.irep.608852020-04-13T07:34:53Z http://irep.iium.edu.my/60885/ A real asset management approach for Islamic investment in containerships Abdullah, Adam Hassan, Rusni Kassim, Salina HE199 Freight (General) HG3368 Islamic Banking and Finance HG4501 Stocks, investment, speculation Purpose – The purpose of this paper is to provide a real asset management investment appraisal of the performance of containerships as a primary segment within international shipping, to facilitate Islamic equity investment through a shipping fund. The objectives are to evaluate the risks and returns of shipping under the framework of Islamic equity finance, and to analyze the performance of investing in containerships over the long term, to appeal to retail and institutional clients of Malaysian asset management institutions. Design/methodology/approach – Accordingly, the methodology adopts an investment analysis of a full population of historical data over a period of 20 years, to evaluate performance involving a maritime return on investment (MROI), internal rate of return (IRR), net yield and standard deviation measures of risk and return. Findings – The findings reveal that while earnings are volatile in comparison to capital market expectations, unlevered, tax-free returns on containership investments outperform financial and other real assets. Research limitations/implications – Shipping is a strong growth industry with about 84 per cent of global trade carried out by the international shipping industry. The problem is that many Islamic asset management institutions and investors have essentially no exposure to Islamic investment in international shipping. Practical implications – However, shipping is a highly capital-intensive industry, and currently 75 per cent of ship lending has been conducted by European banks and financed on a conventional basis. Postfinancial crisis, ship owners, ship lenders and shipyards have all been exposed to the impact of over-levered balance sheets and debt finance. There is a demand for alternative sources of finance. Social implications – By communicating risk and reward more effectively, retail and institutional investors, as well as Islamic finance institutions, will realize that the social benefit of equity finance on the basis of profit sharing is more efficient at allocating investible resources than debt finance at interest, thereby increasing investment and economic growth. Originality/value – The significance is that Islamic equity finance, rather than debt at the time-value of money, should enhance the development of international shipping Emerald Publishing 2020-01 Article PeerReviewed application/pdf en http://irep.iium.edu.my/60885/13/60885%20%20A%20real%20asset%20management%20approach.pdf application/pdf en http://irep.iium.edu.my/60885/14/60885%20%20A%20real%20asset%20management%20approach%20SCOPUS.pdf Abdullah, Adam and Hassan, Rusni and Kassim, Salina (2020) A real asset management approach for Islamic investment in containerships. Journal of Islamic Accounting and Business Research, 11 (1). pp. 27-48. ISSN 1759-0817 https://www.emerald.com/insight/content/doi/10.1108/JIABR-07-2017-0105/full/html?skipTracking=true I 10.1108/JIABR-07-2017-0105 |
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HE199 Freight (General) HG3368 Islamic Banking and Finance HG4501 Stocks, investment, speculation |
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HE199 Freight (General) HG3368 Islamic Banking and Finance HG4501 Stocks, investment, speculation Abdullah, Adam Hassan, Rusni Kassim, Salina A real asset management approach for Islamic investment in containerships |
description |
Purpose – The purpose of this paper is to provide a real asset management investment appraisal of the
performance of containerships as a primary segment within international shipping, to facilitate Islamic equity
investment through a shipping fund. The objectives are to evaluate the risks and returns of shipping under
the framework of Islamic equity finance, and to analyze the performance of investing in containerships over
the long term, to appeal to retail and institutional clients of Malaysian asset management institutions.
Design/methodology/approach – Accordingly, the methodology adopts an investment analysis of a full
population of historical data over a period of 20 years, to evaluate performance involving a maritime return on
investment (MROI), internal rate of return (IRR), net yield and standard deviation measures of risk and return.
Findings – The findings reveal that while earnings are volatile in comparison to capital market
expectations, unlevered, tax-free returns on containership investments outperform financial and other real
assets.
Research limitations/implications – Shipping is a strong growth industry with about 84 per cent of
global trade carried out by the international shipping industry. The problem is that many Islamic asset
management institutions and investors have essentially no exposure to Islamic investment in international
shipping.
Practical implications – However, shipping is a highly capital-intensive industry, and currently 75 per
cent of ship lending has been conducted by European banks and financed on a conventional basis. Postfinancial crisis, ship owners, ship lenders and shipyards have all been exposed to the impact of over-levered
balance sheets and debt finance. There is a demand for alternative sources of finance.
Social implications – By communicating risk and reward more effectively, retail and institutional
investors, as well as Islamic finance institutions, will realize that the social benefit of equity finance on the
basis of profit sharing is more efficient at allocating investible resources than debt finance at interest, thereby
increasing investment and economic growth.
Originality/value – The significance is that Islamic equity finance, rather than debt at the time-value of
money, should enhance the development of international shipping |
format |
Article |
author |
Abdullah, Adam Hassan, Rusni Kassim, Salina |
author_facet |
Abdullah, Adam Hassan, Rusni Kassim, Salina |
author_sort |
Abdullah, Adam |
title |
A real asset management approach for Islamic investment in containerships |
title_short |
A real asset management approach for Islamic investment in containerships |
title_full |
A real asset management approach for Islamic investment in containerships |
title_fullStr |
A real asset management approach for Islamic investment in containerships |
title_full_unstemmed |
A real asset management approach for Islamic investment in containerships |
title_sort |
real asset management approach for islamic investment in containerships |
publisher |
Emerald Publishing |
publishDate |
2020 |
url |
http://irep.iium.edu.my/60885/13/60885%20%20A%20real%20asset%20management%20approach.pdf http://irep.iium.edu.my/60885/14/60885%20%20A%20real%20asset%20management%20approach%20SCOPUS.pdf http://irep.iium.edu.my/60885/ https://www.emerald.com/insight/content/doi/10.1108/JIABR-07-2017-0105/full/html?skipTracking=true |
_version_ |
1665894765917372416 |
score |
13.160551 |