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May 20 2012

Investors hold $1.5t in shari’ah compliant assets

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Sunday, May 20, 2012

Investors globally hold more than $1.5 trillion in Sharia-compliant assets which include equities that are in line with Islamic principles, Sukuk and Islamic funds, according to a senior official at the Central Bank of Bahrain.

“Islamic financial products represent a class of investment which appeals to those looking for socially responsible or ethical investments, as these products comply with strict Shariah rules that have religious as well as ethical underpinnings,” Abdul Rahman Mohammed Al Baker, Executive Director Financial Institutions Supervision at the CBB told the audience of the 8th Annual World Islamic Funds and Financial Markets Conference (WIFFMC 2012).

“Currently, there are more than 500 funds globally that comply with Islamic principles, of which one third of these funds were launched during the past seven years. Sukuk is another Islamic financial instrument that shows a significant growth during the past five years. It was estimated that the global Sukuk market exceed $200 billion as of the end of the first quarter of this year. Actually, the year 2012 saw a revival in the global sukuk markets due mainly to gradual recovery of global economy and investors’ sentiment which drives the demand for sukuk. It is clear that sukuk issuance in the first quarter of 2012 exceeded all expectations reaching a record $43 billion globally. This is almost double the average amount of sukuk issued in any given quarter in the past year, and represents half the total amounts of sukuk issued throughout 2011,” he said.

The WIFFMC 2012 witnessed a high-profile opening today at the Gulf Hotel in the Kingdom of Bahrain. Confirming its position as the world’s pre-eminent gathering of Islamic investment leaders, WIFFMC 2012 convened leading players, industry thought leaders and key regulators in the international Islamic funds and investments industry for discussions that focused on charting a new growth horizon and expanding the global footprint of the Islamic funds and investments industry.

The opening session featuring Datuk Noripah Kamso, Chief Executive of CIMB-Principal Islamic Asset Management Sdn Bhd; Fernand Grulms, Chief Executive Officer of Luxembourg for Finance; and Ken Owens, Chairman of the Irish Funds Industry Association (IFIA) evaluated what needs to be done to further build the international reach and scale of the Islamic investments industry.

“2011 was a bumper year for the issuance of Sukuk, at $85 billion, that is, two and a half times the pre-financial crisis record of $33 billion issued in 2007. This huge increase indicates that the Islamic capital markets are back in the game. Nevertheless, we should set the figure in context. In the conventional debt markets, in 2011, $5.4 trillion were issued in the USA alone and the sukuk market in 2011 was driven largely by Malaysia. In other words, the short answer to the question of ‘are Islamic investments building international reach and scale’ is a yes and a no. Shari’ah-compliant capital markets activity currently still remains a niche market; but certainly can and will build international reach and scale,” Fernand Grulms, Chief Executive Officer of Luxembourg for Finance, said.


By Mahmood Rafique - www.twentyfoursevennews.com

24x7 News 2012. All rights reserved.

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