US investment bank JPMorgan will include Islamic bonds, or sukuk, in its emerging markets indices for the first time from later this year, widening the appeal of Islamic instruments among global debt investors, Reuters reported. JPMorgan, which runs the most widely used benchmarks of emerging market debt, will include eight sukuk across its index family starting Oct. 31. The decision was taken after JPMorgan conducted an annual governance review it said in a research report to clients, and seen by Reuters. Dollar-denominated sukuk from Turkey, Malaysia and Indonesia will be included in JPMorgan’s flagship EMBI Global Diversified index, against which an estimated $313 billion in assets is benchmarked. The move could help sukuk break away from their traditional buy-and-hold investor base. “Despite having a market size of $200 billion, so far sukuk was seen as an exotic asset class mainly targeted at Islamic banks,” said Okan Akin, emerging market credit analyst at AllianceBernstein in London.
