Sunday, Jul 19, 2015
Dubai: The S&P Global BMI Shariah index fell in the second quarter to June, underperforming the Mena equity indices. the indices provider said in a statement.
The S&P Global BMI Shariah index fell 0.6 per cent, while the Dow Jones Islamic Market World Index fell 0.8 per cent, trailing their counterparts by 60-70 basis points respectively as financials, which tend to be underrepresented in Islamic benchmarks, were a top-performing sector.
Regional performance was tightly clustered, as the S&P500, S&P Pan Asia BMI Shariah, and S&P Europe 350 Shariah each declined less than 1 per cent. Mena equity markets showed relative strength, as the S&P Pan Arab Composite Shariah gained 4.3 per cent.
Slow issuances
However, S&P Mena Sukuk, which has 42 constitutients, rose 1.5 per cent on year to date basis, however the global sukuk market is set for a slowdown after a strong 2014.
The global sukuk market is heading toward a correction in 2015 after the Central Bank of Malaysia (BNM) — one of the largest issuers of sukuk worldwide — stopped issuing earlier this year, S&P the ratings agency said.
BNM’s move leaves the door open to issuers such as the International Islamic Liquidity Management Corporation (IILM) and the Islamic Development Bank (IDB) to step up their issuance and provide the industry with liquidity, thereby contributing to the development of an Islamic yield curve.
“In the first half of 2015, BNM’s pullback saw total sukuk issuance drop by 42.5 per cent compared with the same period a year earlier, said Standard & Poor’s global head of Islamic Finance Mohamed Damak. “In 2014, BNM alone issued about $45 billion of sukuk out of a total issuance of $116.4 billion.”
Staff Report
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