Читать книгу Introduction to Islamic Banking and Finance - M Kabir Hassan - Страница 17

In Shari’ah-compliant asset management, there are more than 1,410 Shari’ah-compliant mutual funds operating globally. By the end of 2017, the total global Islamic assets under management (AUM) stood at $110 billion as shown in Table 1.4.

In Islamic capital markets, Sukuk is an instrument representing ownership in the underlying asset to the proportion of investment in that underlying asset. The underlying physical asset can be financed using Islamic trade- and lease-based modes of financing. The funding for the asset comes from issuing participation certificates (i.e. Sukuk) to the investors. The returns on these assets come in the form of profit on sale or rentals on the use of the assets, which are paid by the issuer of Sukuk. Sukuk is one of the significant contributors to the total assets of the Islamic finance industry with a total outstanding value of $426 billion in 2017. Overall, 19 countries observed Sukuk issuances, amounting to $85 billion in 2017. Among these, agency Sukuk constituted a 6% share, whereas sovereign issuances and corporate issuances constituted 31% and 63% shares, respectively.

Table 1.4. Growth in Islamic fund assets.

Source: Thomson Reuters Global Islamic Finance Report 2018.

In Islamic investments, to determine the eligibility of a company with regard to Shari’ah compliance, two sets of criteria are employed. The first step is the qualitative screening. In this process, the companies are screened on the basis of whether their core business is in conformity with Islamic principles or not. Companies dealing in prohibited goods and services are considered non-eligible for selection in the Islamic index or portfolios. For instance, if a company sells goods and services such as alcoholic drinks, arms, pork, intoxicants, pornography, or betting, the company is considered Shari’ah non-compliant. If a company engages in interest and gambling-based financial products, such as conventional banking, leasing, and insurance, the company is rendered non-eligible for selection in the Islamic index or portfolios.

After eliminating firms with Shari’ah-non-compliant business operations, the remaining firms are evaluated on quantitative indicators. These quantitative indicators are related to Shari’ah-non-compliant leverage, Shari’ah-non-compliant investments and Shari’ah-non-compliant income. Finally, the dividend income obtained on Halal stocks is purified to exclude the Shari’ah-non-compliant portion of the income from dividends.

Figure 1.2 plots the daily closing index values of the Dow Jones Islamic Market World Index from May 2009 to May 2019. The holding period return for the overall period was 135% during the 10-year period. The average annual return during the period is clocked at 10% per annum, whereas the CAGR has remained at 9% per annum.

Figure 1.2. Dow Jones Islamic Market Index closing values (May 2009–2019).

Source: S&P Dow Jones Indices.