Australian investment manager Hyperion Asset Management is poised to extend its services in the Middle East after the Central Bank of Bahrain approved the formation and marketing of the Hyperion Australian Equity Islamic Fund in the country.

The fund is the first Shariah-compliant offshore fund comprised of Australian stocks. It will be available for "expert" investors, or what Bahrain authorities describe as individuals and institutions with at least $100,000 in financial assets. It is managed in Australian dollars and reported in US dollars.

"We selected Bahrain as the jurisdiction for the fund because we believe the Central Bank's role provides an additional degree of comfort for investors," said Douglas Clark Johnson, chief executive of Codexa Capital, which represents the product in selected markets.

"Meeting Bahrain requirements enhances transparency and integrity at a time when these attributes have taken on much greater importance. Bahrain contrasts with some other offshore jurisdictions that provide little or no oversight for the investor," Johnson added.

The Australian stock market is the second largest in Asia ex-Japan. Having avoided the recession during the recent global crisis, it is expected to record a 3 to 4 per cent annual growth in GDP over the next years.