S&P International Rankings famous that the Islamic finance trade continues to be held again by structural weaknesses
The $2.2 trillion world Islamic finance trade will increase about 10 per cent in 2022-2023 after the same progress pattern in complete belongings in 2021, albeit it’s nonetheless held again by structural constraints, in response to a brand new report.
“This 12 months, we expect larger commodities costs will underpin a stronger restoration in lots of core Islamic finance markets. Furthermore, most of those nations are comparatively resilient to macroeconomic shocks ensuing from the Russia-Ukraine battle. It will assist the trade’s prospects for 2022-2023 however world headwinds might change the image,” stated S&P International Rankings head of Islamic finance Mohamed Damak.
In keeping with Invesco consultants, who count on to see the continued progress of alternatives for buyers on the lookout for Shariah-compliant funding automobiles in 2022, a outstanding rise within the vary of Islamic exchange-traded funds (ETFs) would drive world Islamic finance belongings to develop t $4.94 trillion in 2025.
The surge in ETFs has been attributed to fund managers within the UAE, Saudi Arabia, america, and Europe.
ETFs general had a report 12 months in 2021 with greater than 900 new launches worldwide and over $1 trillion in world web inflows, taking belongings below administration to $9.9 trillion on the finish of November, in response to Invesco consultants, who count on to see the continued progress of alternatives for buyers on the lookout for Shariah-compliant funding automobiles in 2022.
S&P International Rankings famous that the Islamic finance trade continues to be held again by structural weaknesses, specifically the complexity inherent to transactions and the correlation of efficiency with oil costs given focus in commodities-exporting nations. What’s extra, the clear desire of some Shariah students for a better proportion of revenue and loss sharing in sukuk is posing sure authorized challenges.
“Nonetheless, we see alternatives within the alignment of sure Islamic monetary merchandise and environmental, social, and governance components and up to date strides in digitalization. We count on to see a better quantity of inexperienced and sustainability sukuk (from a low base) as issuers look to broaden the investor base and embody funds aligned with sustainability themes. Furthermore, digital sukuk might generate vital investor curiosity sooner or later as soon as the mandatory conditions are applied,” stated the report.
“Primarily based on these components, we imagine the market will increase about 10 per cent in 2022-23 after 10.2 per cent progress in complete belongings in 2021 (excluding Iran),” Damak stated.
— issacjohn@khaleejtimes.com
