Islamic securities poised for growth

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In spite of the recent credit crunch and the volatility of global market, prospects for growth in Islamic securities markets are likely to be positive, said a leading banking expert at a key summit in Bahrain.

This positive trend can be attributed to the rapid expansion and increasing sophistication of the GCC financial markets, as well as the geographical spread of Islamic securities, products and services which recorded outstanding growth in Europe, Asia Pacific, North Africa as well as Central Asian countries, reported the Gulf Daily News, our sister publication, citing the Central Bank of Bahrain (CBB) executive director of financial institutions supervision Abdul Rahman Al Baker.

“Islamic asset management has come a long way since the 1970s when it began as a way for Islamic banks to make use of their excess funds,” he said at the opening session of the ninth annual World Islamic Funds and Financial Markets Conference (WIFFMC 2013) at the Gulf Hotel yesterday.

“Today, as with other forms of Islamic finance, the industry is an area that has grown to become an increasingly substantial segment within the global financial markets and has gained significant interest as a viable and efficient alternative model of financial intermediation.

“Growing awareness of and demand for investing in accordance with Sharia principles on a global scale have been the catalyst towards making the Islamic financial services a flourishing industry,” he said.

“Generally, it is estimated that Islamic financial assets globally reached $1.6 trillion at the end of 2012, and it is expected to exceed $2 trillion by 2015,” he added.

“There are more than 600 funds globally that comply with Islamic principles, of which one-third 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 reached $235 billion at the end of the first quarter of 2013, a growth of almost 17 per cent compared with the same period last year. “Actually, this year 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,” he said.

“In Bahrain, the mutual funds industry is one of the fastest growing segments of the overall financial sector.

“Overall, there are 96 Islamic funds incorporated and registered in Bahrain, with total assets of $1.8 billion as of March.

“The CBB, through its enabling legislation, promotes the development of new products for investors in both Islamic and traditional finance, while at the same time providing credible regulation in both areas,” he said.

“Generally, the potential size of Islamic finance market is vast, and the accelerated establishment of Islamic finance hinges on attracting the flow of these potential funds into Islamic investment.

“However, it is important to ensure that Islamic funds and the investment industry have solid and strong foundations for future development and growth,” he added.-TradeArabia News Service

Tags:
Bahrain | Islamic Finance | Summit | Sharia |