Kuala Lumpur (Malaysia), July 17: Despite the global slowdown which did not spare even the Islamic financial industry overall, Islamic capital market surged in 2016 compared to the previous year.
“Islamic Capital Market performed better in 2016 than in 2015. Ṣukūk issuances increased and Islamic stocks generated profits,” says the Malaysia-based Islamic Financial Services Board (IFSB).
“The volume of annual ṣukūk issuances reached USD 75 billion in 2016, bringing the volume of outstanding ṣukūk close to USD 320 billion,” says IFSB in its Islamic Financial Services Industry – Stability Report 2017 .
According to the report, 79% of the ṣukūk issuances originated from sovereigns, including Government Related Entities and multilateral organisations such as Islamic Development Bank and International Islamic Liquidity Management Corporation; only 21% were corporate issuances.
However, there were some setbacks also.
“2016 saw the first default of a ṣukūk in 6 years (issued by an oil and gas-based company in Singapore). Expected ṣukūk issuances in non-OIC jurisdictions did not materialise. In contrast to previous years, Sharīʻah-compliant equities generated lower returns than conventional equities. The number of Islamic funds has decreased slightly and nearly 30% of the funds have become inactive,” says the report.
Islamic Financial Services Board or IFSB, based in Kuala Lumpur, Malaysia, is an international standard-setting organisation. IFSB promotes and enhances the soundness and stability of the Islamic financial services industry by issuing global prudential standards and guiding principles for the industry. It started operations in 2003.