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Sukuk Market in Arab shows chances of recovery

Published: 10/01/2012 01:31:00 PM GMT
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As the value of Sukuk Islamic bonds bounced back to a stable 33% in the 3rd quarter of the year the IPOs and the foreign capital suffered a constant set back. While around $2.4 billion worth of 10 Sukuk bonds were issued in the 2nd quarter of the year and finally the rise continued to the third quarter with $3.19 billion in the 3rd quarter under the issuance of 12 Sukuk bonds these figures were declared by Abu Dhabi-based Arab Monetary Fund (AMF), Emirates24/7 wrote.

It was predicted by the financial market that due to the chaotic situation in the region the Sukuk market would suffer heavy losses, although it suffered losses during the mid of 2011, yet now as the chaos  draws towards conclusions the market also seems to improve. "the political unrest in the Middle East region was the major worry for the investors in the region and it was thought that it would largely effect the sukuk and investments but it is not so since the pressure shifted to the foreign capital inflow and IPOs," said the AMF, which collaborates with the Cairo based Arab League. "After the gradual improvement in the IPO market in the Arab World, the second quarter of last year’s activity receded again and than in the third quarter because of the regional political events and the unrest caused many companies to quarantine and even postpone their plans to issue new IPOs”

It was also brought to notice in the meeting of the Arab investors that the reports showing only 3 IPOs issued in the third quarter of 2011 for worth $283 million compared with the 6 IPOs issued for worth $375 million in the second quarter have helped a lot on maintaining the Sukuk market in the Arab world. So all in all the total amount of IPOs issued in the Arab region in the first nine months of 2011 at 11 held the worth that reached nearly $679 million.

"Regarding the investments, it has also been noticed that the common foreign investors would be continuing to stay out of the region's markets as their sales of shares held again by the foreign investors had largely exceeded majority of their purchases leaving behind only the exception of the bourses of Abu Dhabi, Amman, Riyadh and Muscat. These markets have relatively performed better in the first half of the year as they recorded a positive net foreign capital flow under the stable markets before the political unrest began."

Now the Arab stock market has been under the impact of unrest as it is hit by the political turmoil in the Middle East and North Africa that extends to global financial turbulence as well. According to the AMF, the collective capitalization has sunken by almost $88 billion at the end of September last year from its predicted level which was at the end of the second quarter of the year.



Arab world is predicted to be the most successful Sukuk market in 2012

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