Poll: helping sukuk take off

Author: IFLR Correspondent | Published: 24 Aug 2016
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JP Morgan’s plans to include sukuk in its major bond indices from October this year will no doubt be a boon for the market. The instrument, also known as an Islamic bond, is commonplace in the Middle East and Muslim countries in Southeast Asia. But only a handful of western governments have issued one, with the UK in particular making headlines in 2014.

Ethical finance is certainly on an upwards trajectory; just ask green bond issuers. But aside from Luxembourg and Hong Kong, the western world sukuk boom never followed the UK government’s lead, and opportunities are being missed. In those countries the benchmark has been set, but there’s been very little action since.

Some say Islamic finance’s overreliance on concrete underlying assets is putting people off. That may make sense for some corporates, but for land-rich sovereigns it doesn’t ring as true. Besides, that’s where innovation is born – both phone airtime and the right to travel with an airline have been used successfully in the Middle East.

So this month IFLR’s poll is asking readers exactly what’s holding back the global sukuk market.

Vote on the right-hand side of the IFLR homepage, and check the October issue of the magazine for the results.

And to have your thoughts heard, email elizabeth.meager@legalmediagroup.com for an off-the-record chat. All votes and comments are completely anonymous.

What’s needed to kickstart the global sukuk market?

  • Better harmonisation/standardisation
  • Inclusion in more major indices
  • Improved transparency requirements
  • Better central bank liquidity management tools

Results of previous polls

The challenges of Basel IV
Kickstarting Asian private equity
MetLife’s Sifi saga