The global sukuk market, as highlighted in the TechSci Research report titled “Global Sukuk Market - Industry Size, Share, Trends, Competition Forecast & Opportunities, 2029,” Global Sukuk Market was valued at USD 1021.6 billion in 2023 and is anticipated to grow with a CAGR of 12.6% through 2029.
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Industry Key Highlights
The global sukuk market is characterized by its dynamic growth trajectory, driven by several key factors that underscore its importance in global finance:
Increasing Popularity of Islamic Finance
Islamic finance principles, rooted in ethical and Sharia-compliant practices, have gained traction globally among both Islamic and non-Islamic investors. This growing preference for ethical investment vehicles has propelled the demand for sukuk, which offers stable returns while adhering to religious guidelines. The alignment of sukuk with ethical investment principles positions it as a preferred choice for investors seeking socially responsible financial instruments.
Diversification of Issuers
Traditionally dominated by sovereign issuers, the sukuk market has witnessed a notable shift towards greater issuer diversification. Corporations and financial institutions are increasingly turning to sukuk to raise capital, attracted by its flexibility and ability to cater to varying financing needs. This diversification enhances market depth and resilience, broadening the appeal of sukuk across different sectors and geographies.
Global Investor Interest
Global investors, including Islamic banks, institutional investors, and sovereign wealth funds, have shown significant interest in sukuk due to its stability, predictable returns, and compliance with Sharia principles. This interest extends beyond traditional Islamic finance hubs to encompass regions across Europe and Asia, reflecting sukuk's status as a mainstream financial instrument with global significance.
Financing Infrastructure Needs
Sukuk plays a crucial role in financing infrastructure projects worldwide, addressing the growing demand for sustainable and responsible financing. Governments in emerging markets leverage sukuk to fund critical infrastructure projects such as transportation networks, utilities, and social infrastructure. The alignment of sukuk with sustainable development goals further enhances its appeal as a tool for financing projects with positive social and environmental impacts.
Regulatory Support and Standardization
Enhanced regulatory frameworks and efforts towards standardization have bolstered the sukuk market's growth and credibility. Regulatory clarity and investor protection measures provided by regulatory bodies facilitate sukuk issuance, ensuring legal certainty and market integrity. Organizations such as the International Islamic Financial Market (IIFM) and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) play pivotal roles in developing standardized sukuk structures, fostering market transparency and efficiency.
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Emerging Trends
Integration of Technology
Technology integration is reshaping the sukuk market landscape, with advancements in fintech enhancing issuance processes, trading platforms, and investor access. Blockchain technology, in particular, holds promise for enhancing transparency, reducing transaction costs, and streamlining sukuk issuance and trading processes across borders.
Green and Sustainable Sukuk
There is a growing trend towards integrating green and sustainable elements into sukuk structures. Green sukuk, which finance environmentally sustainable projects, are gaining popularity among issuers and investors alike. This trend aligns sukuk issuance with global sustainability goals and enhances its appeal to environmentally conscious investors.
Cross-Border Issuance
Cross-border sukuk issuance is expanding, driven by increasing global investor interest and issuer diversification. This trend facilitates capital flows across regions, enhances market liquidity, and provides issuers with access to a broader investor base. Cross-border sukuk issuance promotes financial integration and strengthens the global sukuk market's resilience.
Drivers of Growth
Popularity of Islamic Finance Principles
The growing preference for ethical and Sharia-compliant investments among global investors supports the expansion of the sukuk market. Sukuk's adherence to Islamic finance principles, which emphasize fairness, transparency, and ethical conduct, resonates with a diverse investor base seeking socially responsible investment opportunities.
Diversification of Issuers
The diversification of sukuk issuers beyond sovereign entities to include corporations and financial institutions enhances market depth and liquidity. This broadening base of issuers reflects sukuk's adaptability and attractiveness as a financing tool for entities across various sectors seeking capital for growth and development.
Global Investor Participation
Global investor participation, driven by institutional investors, sovereign wealth funds, and Islamic banks, contributes to the sukuk market's liquidity and resilience. The global appeal of sukuk extends beyond traditional Islamic finance hubs, with investors from non-Muslim-majority countries actively participating in sukuk issuance and trading activities.
Infrastructure Financing Needs
Sukuk issuance plays a pivotal role in financing infrastructure projects worldwide, addressing the growing demand for sustainable and responsible financing. Governments in emerging markets utilize sukuk to fund critical infrastructure projects, supporting economic growth, and development objectives while promoting infrastructure sustainability.
Regulatory Support and Standardization Efforts
Enhanced regulatory frameworks and standardization efforts promote market transparency, investor confidence, and issuance efficiency. Regulatory support facilitates sukuk issuance by providing legal clarity and investor protection measures, ensuring market integrity and fostering sustainable market growth.
Future Outlook
The future of the global sukuk market is promising, supported by ongoing advancements in Islamic finance, technology integration, and regulatory frameworks. As sukuk continues to gain traction globally, driven by its ethical foundations, financial resilience, and role in financing sustainable development, the market is poised for continued expansion and innovation.
Key Predictions
Continued Growth Trajectory: The global sukuk market is expected to maintain robust growth, driven by increasing global investor interest, issuer diversification, and infrastructure financing needs.
Technological Advancements: Advancements in fintech, including blockchain technology, will enhance sukuk issuance processes, trading platforms, and market transparency, driving efficiency and accessibility.
Expansion of Sustainable Sukuk: The integration of green and sustainable elements into sukuk structures will expand, catering to investor demand for environmentally responsible investment opportunities.
10 Benefits of the Research Report
Comprehensive Market Analysis: Provides a detailed analysis of the global sukuk market, including market size, growth trends, and competitive landscape.
Insight into Emerging Trends: Identifies and analyzes emerging trends shaping the future of the global sukuk market, enabling stakeholders to anticipate market shifts and opportunities.
Evaluation of Key Drivers: Assesses key drivers fueling market growth, such as increasing popularity of Islamic finance, issuer diversification, and global investor participation.
Challenges and Constraints: Highlights challenges such as lack of standardization, regulatory complexities, and liquidity issues, helping stakeholders navigate market risks effectively.
Regional Market Dynamics: Analyzes regional dynamics and market segmentation to provide targeted insights into regional growth opportunities and investment potential.
Regulatory and Legal Insights: Provides insights into regulatory frameworks and legal considerations impacting sukuk issuance, ensuring compliance and market entry strategies.
Competitive Landscape Analysis: Profiles major companies operating in the global sukuk market, their strategies, and market positioning, aiding stakeholders in competitive benchmarking.
Forecast and Projection: Offers reliable forecasts and projections for the global sukuk market, guiding strategic planning and investment decisions over the forecast period.
Customization Options: Offers customization options for the report, allowing stakeholders to focus on specific sukuk types, issuer categories, or regional markets of interest.
Strategic Recommendations: Delivers strategic recommendations based on market insights, enabling stakeholders to capitalize on emerging trends and market opportunities effectively.
Customers can also request for 10% free customization on this report.
Competitive Analysis
The global sukuk market features a competitive landscape with prominent players driving market growth and innovation. Major companies operating in the market include Abu Dhabi Islamic Bank PJSC, Al Baraka Banking Group, Al-Rajhi Bank, Banque Saudi Fransi, Dubai Islamic Bank, HSBC Holdings Plc, Kuwait Finance House, Malayan Banking Berhad, Qatar International Islamic Bank, and RHB Bank Berhad.
Competitive Strategies
Innovation and Product Development: Companies are focusing on developing innovative sukuk structures, including green and sustainable sukuk, to cater to evolving investor preferences and regulatory requirements.
Market Expansion: Global players are expanding their presence in key markets across regions, leveraging their expertise and network to offer comprehensive sukuk solutions and enhance market penetration.
Partnerships and Collaborations: Strategic partnerships with local financial institutions and regulatory bodies strengthen market access and facilitate sukuk issuance, fostering market growth and investor confidence.
Customer-Centric Approach: Providers are adopting a customer-centric approach to tailor sukuk solutions to meet specific issuer requirements and investor expectations, enhancing market competitiveness and client satisfaction.
Conclusion
In conclusion, the global sukuk market continues to evolve as a preferred choice for ethical and Sharia-compliant investments, driven by increasing investor demand, issuer diversification, and infrastructure financing needs. With robust growth prospects supported by technological advancements, regulatory enhancements, and sustainability initiatives, sukuk is poised to play a pivotal role in shaping the future of global finance. Stakeholders in the sukuk market, including issuers, investors, and regulatory bodies, are well-positioned to capitalize on emerging trends and navigate market complexities to achieve sustainable growth and financial resilience.
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