Islamic finance has traditionally been dominated by Muslim-majority countries in the Middle East and Southeast Asia. Now much of the rest of the world is getting in on it.

Buoyed by the perception of more tranquil market conditions and an improving regulatory backdrop, issuance of Islamic debt by non-Muslim countries is set to climb to a three-year high in 2017, according to Dealogic data.

Islamic financial products comply with Sharia, or Islamic law, and are based on the principles of risk and profit-sharing. Sharia prohibits earning interest on loans, and it bars funding activities involving alcohol, pork, pornography or gambling.

The value of sovereign sukuk, or Islamic bonds, issued outside the Middle East and Southeast Asia by non-Muslim countries reached $2.25 billion in the 11 months through November, data by Dealogic showed. That’s higher than 2016′s $2 billion and more than double the $1 billion recorded in 2015.


Islamic finance’s metamorphosis from a niche corner of global banking to a growing source of funding for rest of the world has been aided by a storied list of borrowers who have sold sukuk in recent years.

The government of Singapore was one of the earliest non-Muslim entrants into the space, followed by the United Kingdom, Luxembourg and Hong Kong, which issued their first sukuk in 2014. More recently, African nations such as South Africa, Nigeria and Ivory Coast have made legal and tax changes to, among others, make it easier for borrowers to issue sukuk.

Companies haven’t been far behind, with the likes of Goldman Sachs and General Electric’s GE Capital also selling Islamic bonds in the past few years.

Chinese entities such as Country Garden and Beijing Enterprises Water Group have also issued Islamic bonds through their Malaysian subsidiaries in 2015 and 2017, respectively. The companies used those proceeds to finance projects in the Southeast Asian country.


Experts said the global financial crisis spurred governments and companies to diversify their funding options. Islamic finance is seen as a more stable alternative to the conventional banking system and therefore appealed to borrowers still haunted by the gyrations in global bond and equity markets when the U.S. housing bubble burst, they added.

In addition, the asset class has also attracted the attention of investors taking a more ethical approach to managing their money.

“Heightened appeal for sustainable and responsible investing could also be driving the growth for Islamic finance due to the commonalities in values and shared principles,” Ruslena Ramli, head of Islamic finance at Malaysian credit rating agency RAM, told CNBC.


[size=15pt]Variety of categories[/size]


There are several categories of Islamic financial products, according to the World Bank:

Mudaraba — a financial expert offers specialist investment advice to a customer and they share any profits at an agreed ratio.
Musharaka — an investment partnership in which two or more parties, such as the bank and its clients, share profits and losses from a pooled investment at an agreed ratio.
Murabaha— the financial institution buys the asset, such as a home or a car, and sells it to a client at a profit. Payment could be in a lump sum or in instalments.
Ijara— the financial institution buys the asset and leases it to a customer for a fixed rental payment. The bank retains the ownership but may transfer that to the client eventually.
Sukuk — similar to a bond but a sukuk buyer owns part of the underlying asset that is invested for returns.
Sharia principles, which prohibit “speculative-type of businesses,” ensured Islamic finance products were less volatile when global financial markets were rumbled during the debt crisis, said Ahmad Fuzi Abdul Razak, the secretary general of the World Islamic Economic Forum Foundation.

“The crisis that took place was a result of excessive speculation, which is harmful. Islamic finance has avoided such pitfalls,” he told CNBC.




[size=15pt]Growing, but still small[/size]



Yet, the involvement by those outside the Muslim world is still “sporadic,” experts said. The Middle East and Southeast Asia still account for a large majority of Islamic financial assets. In the sovereign sukuk space, Middle Eastern countries raised $11.85 billion in the 11 months through November, followed by Southeast Asia at $3.96 billion, Dealogic data showed.

Total Islamic financial assets have grown by 10 to 12 percent annually over the past decade to hit $2 trillion. But at less than 1 percent, they remain only a small fraction of global financial assets, according to the International Monetary Fund.

One hurdle standing in the way is the lack of standardization, Fitch Ratings said. Currently, different jurisdictions interpret Sharia differently and there is also variation in how Islamic finance products are structured. Differences in how disputes are resolved and reporting standards are monitored add to the complexity.

“In some cases, there is still little standardization even at a local level, while in others, progress would be needed on a regional, or international, basis,” Fitch said in an October report.

Such divergence in interpretation can deter investors and the progress to resolve that issue will likely be “slow and patchy” given the scale of the challenge, Fitch added.

Experts told CNBC that notwithstanding the challenges, the Islamic finance sector is still poised for growth. The industry’s size is expected to expand further to $3.5 trillion by 2021 as countries and companies look for alternative funding sources, and tap a larger pool of investors.

As an example, Maybank’s head of global banking business, Arshad Ismail, said the sukuk market allows issuers to attract both Muslim and non-Muslim investors and therefore widen their sources of funds.

The financing costs for sukuk are also “generally similar” to conventional bonds as there is more expertise to execute such transactions now, which adds to the product’s appeal, he added.


Sauce https://www.cnbc.com/2017/12/19/sukuk-islamic-finance-grows-in-non-muslim-countries.html?fbclid=IwAR2RC_5qbBBNKC3EQI4zH6rdshr_LPK7v9DM1t_Isk20pVzV0UH9zUU9fRg

Everyone loves fair play.
If we can share profi why not loss tooo.

More like Terrorists bank of East london.

Nice one

Masha Allah. Allah is Great

Ma sha Allah

gypsey:
More like Terrorists bank of East london.

envious xtian

Self deceit of the highest order...

masha ALLAH

Chitumu:
envious xtian

I have no Religion, I don't even believe in The bloody God. Religion have ruined this Earth. See how Saudi Arabia are bombing yemen, killing women and their babies. See how pakistan and India are killing themselves All because of Islam.

Islam is just too awesome, not every body understand it, only those who are willing to accept the truth

Alhamdulillaah

Awon werey ti de

sharap

good work may Allah reward u

Printerscanner:


Your hatred for Islam and Muslims is driving fast to your grave. In case you want to make it faster, I sell subsidized Sniper Insecticide.

Is this Rubbish supposed to make sense?

Islamic Financing is the way to go..!!

I have to open account with them next month InshaAllah after my wedding.

I love this "principle base on profit and risk sharing".

gypsey:
I have no Religion, I don't even believe in The bloody God. Religion have ruined this Earth. See how Saudi Arabia are bombing yemen, killing women and their babies. See how pakistan and India are killing themselves All because of Islam.

so you are atheist that believes when you die, you just decay, like other animal. That's the end. Mtcheew.

Realtord43:
Awon werey ti de

I read all your 12 posts, all I can see is frustration, unnecessary Wailing, throw and bad manners. Seems your live is nothing more than that, the politicians you are cursing won't die, they might even outlive you, the muslims you are using absurd words against have nothing to loose, you better live a peaceful life, a life you and your family would be proud of. A word is enough for the wise.

Dadaboddo:
Everyone loves fair play.
If we can share profi why not loss tooo.

the scheme shares loss as well

objobj:

the scheme shares loss as well

I'm aware

Recall ten years ago during financial meltdown around the world, Islamic Banking System was introduced in USA, especially new York with zero interest.

Western media outlets couldn't but advertise it when they couldn't not resist their urged for it. I remembered on ABC newsletter said at that time that they would opt for Islamic Banking. They were so attracted to it to alleviate recession. After economy improved, they returned to their conventional banking . Unfortunately some of these "Islamic Banks" have drifted off essence to back door riba.

Our pride is their fear. This is far better, sensible & Godly than the conventional banking system of which the interest rates are neck breaking. Take it Or leave it, ISLAM is the way.

Lanre0:
Our pride is their fear. This is far better, sensible & Godly than the conventional banking system of which the interest rates are neck breaking. Take it Or leave it, ISLAM is the way.

Islamic banking being fair does not automatically give a pass to all of its practices.