Aberdeen Islamic – More Client Queries

The decision by JPMorgan to include Sukuk in its indexes will draw more global investors to the Sukuk market and boost trading of the financial instrument.

Barclays made a similar decision last year in a move which at the time was stated would boost international demand by attracting more non-Islamic investors to Malaysian sukuk. Barclays Global Aggregate Index is a flagship measure of global investment grade debt from 24 local currency markets. In a Bloomberg report Haslinda Amin stated the asset management industry had witnessed an increased interest amongst clients for sukuk following JP Morgan’s announcement.

JP Morgan’s Indexes

JPMorgan runs industry leading benchmarks of emerging market debt and will start to include eight sukuk across its indexes starting October 31. Two corporate sukuk will be included JPMorgan’s Corporate Emerging Markets Bond Index,  Dubai’s DP World and Saudi Electricity Co. Pakistan’s $1 billion 2019 sukuk will be included in the JPMorgan Asia Credit Index.

Growing Size of Sukuk and Islamic Finance Industry

Traditionally the size of the Islamic finance industry has been measured as hard assets held by institutions considered being part of the Islamic finance industry. Estimates of the current size of industry range from $1.88 Trillion to $2.1 Trillion with expectations of market size to be $3.4 Trillion by end of 2018. Sukuk represent the second largest segment of the Islamic finance industry (after Islamic Banking). The Bahrain based International Islamic Financial Market (IIFM) in its 2016 Sukuk Report stated 2015 witnessed a major drop in issuances when only USD60.6 billion Sukuk were issued, a massive 43% fall compared to 2014.