News is an important asset for capital markets and the finance industry, and in Islamic finance it is the sunlight needed to "disinfect" accusations of opaqueness.
But today's Islamic finance "news" is often a mix of press releases, articles which repeatedly interview the same subjects, and old information.
It also shows little understanding of the economic environment in which Islamic finance news operates. Islamic finance blogs and chat rooms do a good job of reporting the news, but at times turn into personal attacks which result in electronic bullying.
The recent announcement by the Malaysian state of Kelantan that it would have its own currency resulted in insults being directed towards members of chat rooms who were defending the proposed currency. Brotherly respect and freedom of speech seemed to be hijacked by Darwinian aggressiveness. Islamic finance does not operate in a vacuum.
Reporting on news about the central bank, interest rates, and money markets for, say, the home country is an important starting point for reporting on Islamic finance.
Sukuk issuance
Islamic finance contracts, be they syndicated Islamic loans for project finance, Sukuk issuance or Islamic home financing, are price-linked to LIBOR or the US Treasury.
But websites which provide only Islamic finance news — while well meaning — fail to provide the full picture for their users.
In the area of Islamic funds, project finance, real estate or Takaful, reports are infrequent. In terms of the date, there are large gaps between stories.
Furthermore, as there are no Islamic Sovereign Wealth Funds yet, you rarely see a category for that subject on portals.
So why is "conventional" financial news important when it comes to reporting Islamic finance? It's simple. There may be new conventional funds launched, or liquidated and merged, or new insurance regulations and products.
Such developments provide insight and opportunities for the business development teams at Islamic banks.
It's been said that Islamic finance is six to 18 months behind conventional finance, and now there is a need to reduce this gap when it comes to the news.
Asset classes
On the data side, if the news about Islamic finance is solely focused on spot prices for asset classes, it is not serving its users.
News which provides Islamic finance users with, say, index and commodity futures or credit default swap pricing, shows the outlet is forward looking.
Thus, at one level, Islamic banks need to have data that helps them meet their fiduciary duty of care to mitigate risk, whilst Sharia prohibitions prevent using such data (today) for investing or trading.
May be it's laziness, an accessibility issue, a restrictive policy towards the media, or a lack of competent and articulate Islamic bankers and managers.
Repeat interviews
But it seems stories in local papers or wire services related to an Islamic asset class, or to Islamic investing or an Islamic country, interview the same few people each time.
The resulting "interviewee fatigue" gives the impression that the industry is comprised of only a handful of specialists, who are much like scholars.
Additionally, it appears to put the finance firm in a "key man" risk situation, where the often-interviewed person becomes the bank's alter-ego.
If he or she departs it results in an apparent vacuum and the perception of crisis in the short term.
Thus, more Islamic banks need to have their staff, including the CEO, undertake media training programs, so that more staff are available for interview and to answer the tough questions.
But why do some Islamic bank CEOs shy away from aggressive western journalists and prefer local interviews? The media actually serves as a kind of "markets police" and provides accountability for depositors and minority shareholders.
Specialists
Journalists in Islamic finance also need to have better training in Islamic finance and to be able to access up-to-date data.
The act of turning a press release into an article, and keeping to the soft questioning of executives, does not benefit the industry.
Islamic finance, however, is not easy to grasp. Understanding conventional finance is just the beginning.
Reporters must be familiar with Arabic terms, Sukuk modes of contract, screening for equities, and the lack of standardisation and harmonisation between regions, otherwise may miss important stories because they cannot formulate the right question.
Additionally, at conferences about Islamic finance the required moderator is often a member of the media, not a businessman.
Enlightened
And he or she is usually a member of the "conventional" media as established media people who are knowledgeable about Islamic finance are very difficult to find.
Enlightened newspapers in Muslim countries where Islamic finance is part of the financial system, such as the UAE, Bahrain or Malaysia, have recognised the need for properly trained Islamic finance journalists.
But, having journalists being able to write about Islamic funds, Takaful, or Sukuk/Syndicated loans comes down to training, and having the resources to generate sufficient content for news in the area.
Rushdi Siddiqui is Global Head of Islamic Finance at Thomson Reuters. The views expressed are his own and do not reflect that of his organisation or Gulf News.
