The growing Islamic finance market helps economies diversify their investor base, says Mohamed Damak, Director and Global Head of Islamic Finance at Standard & Poor's.
Damak told that recently there were new players in the market for sukuk – securities similar to bonds – which marked a “significant and growing interest” in Islamic finance, World Bulletin reported.
“In 2014, we have seen sukuk issued by the Britain, sukuk issued by Luxemburg and South Africa,” Damak said. “Why are these issuers doing that?”
Damak argued that issuers outside Persian Gulf Cooperation Council and Asia chose to issue sukuk in order to attract investors from the Middle East and Asia, and therefore diversify their investor base.
For countries like the Britain, Damak said it was more about setting a benchmark for private sector issuers and encouraging them to see sukuk, which is expected to hit $115 billion in 2015, as a complimentary root of financing.
“We don’t think there is a competition between Islamic banking and conventional banking or that any model trying the take over the other. We think there is significant and growing interest in Islamic finance in several countries and that could be seen in recent sukuk transactions from non-traditional issuers,” Damak said.
Meanwhile, Malaysia's deputy finance minister said that the country aims to take the lead in the Islamic financial sector, by being the first economy worldwide to pioneer Islamic wealth management products.
Ahmad Maslan said that the new innovation within the Islamic financial framework would further prosper the global Islamic financial industry, which is expected to grow to $2 trillion this year. As of the end of last year, the total worth of the industry was $1.3 trillion.
