There are a couple of points that stand out:
1) In the context of global stresses and increasing risk aversion from investors, we have seen from the volume of issuance in this year that the Islamic investor base in the Gulf was an important community and less marginal than prior years.
2) Looking forward I think there will be an increased growth, with some from non-Islamic nations. In particular I hope to see the IILM become active is issuing short-term paper much needed by the Islamic financial institutions. Finally I hope for more transparency and harmonization amongst Sukuk, with more genuine asset-backed certificates and increased investor clarity that ‘asset-based’ is the same as ‘unsecured’.
KHALID F HOWLADAR
Senior credit officer, asset-backed and Sukuk finance, Moody’s Middle East
Last year saw a continuing expansion of Islamic finance with assets rising to over US$1 trillion. High oil prices and record government expenditure in the GCC helped the industry which was largely immune from the economic slowdown in Europe. Much of the growth was in Islamic retail banking. Investment banking involving Shariah compliant asset management and Sukuk issuance fared less well. There was record Sukuk issuance in Malaysia, but elsewhere much of the new issuance was simply to refinance maturing Sukuk.
2012 will probably be a continuation of 2011 with a modest recovery in the US partly compensating for Europe’s negative global impact. Higher oil prices, one of the drivers of Islamic financial activity, will be dependent on continuing economic growth in China. The election of Islamist political parties in North Africa is potentially beneficial for Islamic finance, but 2012 is too soon for the impact of these developments to be apparent.
PROFESSOR RODNEY WILSON
Director of postgraduate studies, Durham University