The best of times, the worst of times

The end of the year is once again upon us, and the last 12 months seem to have flashed past at the speed of light – it seems just a few short weeks ago that we were starting out in January with hope in our hearts and a spring in our step, high off the back of a strong year for Sukuk and an even stronger surge of sovereign issuance. So did that optimism translate into reality?
2018 was, as ever, a year of ups and downs – characterized, perhaps unusually, by the external economic headwinds buffeting the industry as much as by its own internal challenges. Despite a strong recovery towards the end of the year the oil price remained turbulent; while the strengthening US dollar and rising Fed rates put pressure on emerging markets and the ongoing threat of a US/China trade war exacerbated geopolitical tensions. The spat between Qatar and its neighbors shows no sign of settling down, while in November the US added to the fuel to the fire with a full reinstatement of sanctions against Iran.

But that is not to say that we have not seen positive developments as well. In the GCC, Saudi Arabia continues to go from strength to strength and the positive progress made towards regulatory reform, not to mention the enthusiasm with which the Kingdom has taken to sovereign Sukuk issuance, is sure cause for celebration. Oman saw its Islamic banking market boom over the year to top 12% of the total market, while an array of banking mergers across the GCC drove a growing trend of market consolidation. Dubai retained its crown as the capital of the regional Islamic economy but Abu Dhabi has also made great strides over the year – driven by the pioneering role of the admirably active Abu Dhabi General Market. Also in 2018 the UAE market regulator finally introduced new standards for Sukuk – a major step forward that underlines the ongoing standardization drive across the industry.

What else was new in 2018? The UK saw its inaugural corporate Sukuk issuance from Al Rayan Bank, Singapore stepped forward once again to express an interest in the Islamic finance space and Turkey made waves (although not always for the right reasons). Green and socially responsible Sukuk hit the headlines with Malaysia and Indonesia taking a strong lead; and REITs stormed the asset management industry with as many as 11 new funds launching over the past year.

The fintech space is another hotspot to watch — with blockchain booming, cryptocurrencies climbing and investment soaring. The US$500 million Transform Fund from the IDB, the ground-breaking Investment Account Platform in Malaysia, the Fintech Hive in Dubai, Bahrain’s Fintech Bay, the newly launched Islamic Fintech Panel in the UK are just a few initiatives that have supported the sector over the past year; while initiatives such as the new robo-advisory service from Wahed Invest, the successful seed funding for the UK’s Yielders, the initial coin offering from Africa’s Ovamba and the first blockchain Sukuk transaction from Al Hilal Bank show that this support is already translating into real commercial progress.

The tumultuous progress of the past year only serves to showcase the strength and sophistication of today’s Islamic finance industry, and in our Annual Guide for 2019 we are delighted to do the same in microcosm — highlighting and applauding not only the achievements and accolades of the last 12 months but recognizing and rewarding the unique characteristics and individual strengths of each market. Featuring a comprehensive overview of the industry from its most respected experts and experienced practitioners, we are once again delighted to provide you with a truly tempting array of material to get your teeth into.

With my sincere thanks for all your support over 2018, I wish all our readers the very best for the year ahead — now sit back, and enjoy the read!

Lauren McAughtry
Contributing Editor