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Tuesday, 7 October 2008

Sukuk Issuance Globally To Exceed US$200 Bln In 2010

KUALA LUMPUR, Oct 7 (Bernama) -- Islamic finance is now one of the fastest growing segments of the global financial system with the sukuk market in particular exceeding US$14 billion as of August this year.It is expected to exceed US$200 billion in 2010.The sukuk market has also expanded at an annual growth rate of 40 percent, Bank Negara Governor, Tan Sri Dr Zeti Akhtar Aziz said yesterday.
She said 2007 witnessed an exceptional growth of the global sukuk market which expanded by more than 70 percent with new issues during the year reaching a record high of about US$47 billion."The outstanding global sukuk market has now surpassed the US$100 billion mark. This growth is spurred in part by the growing funding requirements in emerging market economies, in particular, in Asia and the Middle East."This is reinforced by the continued confidence of investors in Islamic financial instruments," she disclosed in her keynote address, titled "Islamic Finance:A Global Growth Opportunity amidst a Challenging Environment" at the State Street Islamic Finance Congress 2008 in Boston, United States.
The text of her speech was released here today.Zeti said Islamic finance, with total assets under management by Islamic banks and conventional banks offering Islamic banking services, has reportedly exceeded US$500 billion."This growth has also been in the other major components of the Islamic financial system. Islamic mutual funds are estimated to be about US$300 billion, while global takaful or Shariah-compliant insurance contributions are estimated to be about US$5 billion."Thus far, the global financial crisis has had a limited direct impact on Islamic finance," added the governor.According to Zeti, as Islamic finance continues to internationalise on an expanding scale,there will be greater intermediation linkages among the East Asian, West Asian, and the Middle East regions - creating the "New Silk Road".
She also pointed out that there was a growing number of established international financial centres such as London, Tokyo, Hong Kong and Singapore have initiated plans for the integration of Islamic finance.She highlighted that the scope of the Islamic financial business had expanded to more sophisticated financial products in response to the changing global customer base."Such Shariah-compliant products include private equity, project finance, the origination and issuance of sukuk, as well as fund, asset and wealth management products."
Greater financial integration has essentially been facilitated by the more rapid pace of liberalisation supported by the progress achieved in the development of the international Islamic financial infrastructure," she said.Zeti stated this trend had been prompted by the need for greater diversification of risks in the management of funds.

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