July 29 (Bloomberg) -- Islamic finance will play a central role in reviving Asian economies as investors look to emerging markets to deliver higher returns than the U.S. and Europe, according to Kuwait Finance House.

Demand for investments backed by tangible assets like power plants and property grew after banks outside of Asia were hit hardest by the global financial crisis, Baljeet Grewal, managing director of the second-biggest Islamic bank’s research unit, said in a phone interview from Kuala Lumpur yesterday.

“Islamic finance is no longer on the periphery and so any crisis which impacts the global economy will of course impact it,” Grewal said. “However, we believe there will be an Islamic finance-led recovery driven by sukuk issuance and a move to Islamic deposits, which we already saw when some of the large American banks went down.”

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