Abu Dhabi Islamic Bank (ADIB), a top-tier Islamic financial services group, announced the launch of its capital protected Soft Commodity Note that provides an opportunity for investors to invest in this Murabaha based Note, the profit of which is determined by the prices performance of cotton, corn and sugar. Investors can get a maximum upside return of up to 18% over 2 years with an annual payout. The minimum period of investment in the ADIB Soft Commodity Note is two years.
The Murabaha-based ADIB Soft Commodity Note is Shari'a-compliant and is offered to investors as an opportunity to a return based on the expected performance of three commodities - cotton, corn and sugar. These three commodities are directly impacted with the growth in population and buying power of the emerging economies of China, India, Asia and Africa. Prices also depend on climate conditions and energy prices.
ADIB advises that compared to a time deposit expected profit rate of between 1.74% and 1.98% per annum, the ADIB Soft Commodity Note return, which is based on the performance of three soft commodities, is expected to be higher. In addition, the price performance of the three commodities offered in the note, since 2008 and in particular in 2010, has been excellent. We expect this strength to continue over the next two years.
Corn fundamentals are still supportive despite sharp upward prices in 2010. Demand for corn is soaring due to the continued urbanization process in emerging markets. Sugar prices rallied strongly in the second half of 2010 and hit a 29 year-high as supply disruptions due to unfavorable weather continue to hit many of the world's major sugar producing countries. In cotton, Chinese supply disruptions are driving demand for US and Indian exports while textile demand in developed markets is improving.
Subscription will be on a first come first served basis and is open until May 19th 2011, with the minimum subscription amount being only US$ 30,000. This investment is short term in nature, is liquid (only after one year lock-in period) and non-transferable.
ADIB advises that investment should be made with amounts that investors are absolutely certain they will not need until maturity date as capital protection is applicable only on the date of maturity.