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KembaraXtra–Islamic Finance–Islamic Capital Market – Growth in Islamic Funds Assets
-Global expansion of Islamic funds:
-The number of functional Shari’ah-compliant mutual funds worldwide has exceeded 1,410 funds
-These funds operate within the broader framework of Shari’ah-compliant asset management
-The global Islamic assets under management (AUM) are estimated at approximately US$110 billion
-Role of Sukuk in Islamic finance:
-Sukuk are Shari’ah-compliant debt-like instruments that represent proportionate ownership in underlying tangible assets,not pure debt
-Unlike conventional bonds,Sukuk are backed by real physical assets
-These assets are typically financed using Islamic trade-based contracts or leasing (Ijarah) modes
-Structure of Sukuk financing:
-Funding is raised by issuing participation certificates (Sukuk) to investors
-Investors become partial owners of the underlying asset
-Returns are generated from profits on sale or rental income from asset usage,not interest
-These returns are distributed to Sukuk holders according to agreed terms
-Contribution of Sukuk to Islamic finance industry:
-Sukuk form a significant component of total Islamic finance assets
-The value of outstanding Sukuk reached approximately US$426 billion in 2017
-Global Sukuk issuance activity:
-In 2017,a total of 19 countries issued Sukuk
-The total value of Sukuk issued globally amounted to US$85 billion
-Breakdown of Sukuk issuances (2017):
-Agency Sukuk: 6% of total issuance
-Sovereign Sukuk: 31% of total issuance (issued by governments)
-Corporate Sukuk: 63% of total issuance (issued by companies)
-Key takeaway:
-The rapid growth of Islamic funds and Sukuk highlights the increasing global acceptance of asset-backed,Shari’ah-compliant investment structures that link financial returns to real economic activity rather than interest-based lending
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