ISLAMIC CAPITAL MARKETS:PRINCIPLES AND PRACTICES (2ND EDITION) by ISRA

Key ICM products and instruments include ṣukūk, Islamic equity, Islamic unit trusts, Islamic real estate investment trusts (REITs), Islamic exchange-traded funds (ETFs) and Islamic hedging instruments, among others. Two of the sector’s success stories are Islamic equity and ṣukūk, which have gained a phenomenal growth momentum since the 2000s, catering for the financing and investment needs of global market players and increasing the presence of Islamic finance in various jurisdictions, including leading international financial centres (IFCs) such as the United Kingdom, Hong Kong, Luxembourg and others. Many new jurisdictions have also taken noticeable steps to encourage ICM development to broaden their investor base, diversify their product offerings and raise financing for budgetary purposes or key developmental projects. The growth and expansion of the ICM have inevitably brought about new opportunities and added more dynamism in the sector. Synergies between waqf, fintech and sustainability initiatives are the latest trends that are expanding the development of the ICM further. For instance, within the Sharīʿah stock screening arena, ESG screening is being adopted as another form of business screens. On the Islamic funds front, in addition to the emergence of sustainability-focused Islamic funds, the sector has now blended ESG and waqf initiatives to develop waqf-unit trust funds, waqf-REITs and waqf-ETFs whose returns are directed towards socially impactful waqf projects. Robo advisory is another development that players are adopting within the funds’ space to tap into the unserved and underserved segments. There are also innovative solutions being proposed in the ṣukūk market. For example, blockchain technology and digital platforms are digitalising ṣukūk processes and making ṣukūk issuances faster and cheaper. The sustainability agenda is also being embraced and reflected through the issuances of green, social, sustainability or ESG ṣukūk.