Depth of sukuk market needs to improve

Finance experts want increased focus on developing non-banking financial services

Financial experts have said that GCC policy makers should concentrate on developing more non-banking financial services.

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While the sukuk or the Islamic bond market has been growing rapidly the depth of the financial market, especially in the GCC, is not at the level of the developed countries, financial experts have said.

Global asset manager Franklin Templeton Investments believes that policy makers should concentrate their efforts on developing more non-banking financial services.

While acknowledging that liquidity has been on an improving trend, Mohieddine Kronfol, chief investment officer, Global Sukuk and Mena Fixed Income at Franklin Templeton Investments, said he wants policy makers in the Gulf and Malaysia to do more to promote money, debt and sukuk. Markets need more liquidity in the future.

“We would like to see the institutional side develop further, that includes pension funds, insurance companies and asset management companies.” said Kronfol last week in Dubai at the launch of three Sharia complaint mutual funds, on a daily subscription cycle. “You need to pass legislation and really support them.”

Annual global sukuk issuance at the end of 2012 stood at $200bn with 60% coming out of Malaysia. In the UAE last week, there was the listing of the $1bn Emirates Airline sukuk.

Earlier in January, Emirates issued a $750mn amortising bond but it received a lukewarm response due to weak market sentiments.


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