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Islamic Capital Markets

Salman Syed Ali

Distance Learning Course No. 8

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OUTLINE

1. Purpose of CMs and ICMs Salient Features

Nature of IF2. Present State of ICMs

3. Current Issues

4. Performance During Crisis

5. Future of ICMs

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1. Purpose

What is the purpose of CapitalMarkets and Islamic Capital Mkts?

Are capital mkts complement orsubstitute to banking sector?

Why some countries have strongcapital mkts than banks?

Factors responsible for growth of

capital mkts?

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Purpose of CMs and ICMs

Salient Features

Nature of IF

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What do Cap Mkts do

Conventional Islamic

Price setting

Asset Valuation

Erase arbitrage

Raising of capital

Facilitate commercial

transactions

Financial investing

Risk management

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2. Present State of ICMs

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Size of Capital MarketsHow to measure?

By:

New capital raised

Total value (market capitalization) Cross border transactions

Type of instruments

Accuracy of price setting

Stability afforded (risk)

Number of listings

Number of transactions

Value of transactions Number of participants

All of the above in absolute levels as well as

in relative terms.

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Present State (contd)

Funds

Equity

Sukuk

Range and Mix of P roducts

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Number of New Funds

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Funds by Type and Size

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Sukuk Issuance by Year

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Corporate Sukuk: by Type andCumulative Issuance (2000-2007)

Corporate Sukuk by Type and Cumulative Issuance from 2000 to 2007

0

5000

10000

15000

20000

25000

30000

USD

Millions

USD millions 19025.35 19891.66 4080.29 504.5 5018.79 25269.84 9932.93

Shariah Non-Compliant

BBA, Inah, or

UnspecifiedSukuk

Istisna TotalIstisna andIjarah total

Ijarah TotalMusharakah

TotalAll Others

Fixed Return

Tradable

Variable Return

Non-Tradable

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3. Issues in ICMs

Related to Products

Related to Regulation

Related to Microstructrue

Related to Infrastructure

4 P f D i Gl b l

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4. Performance During GlobalFinancial Crisis

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Total Sukuk Issued (USD millions)

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Total Sukuk Issued (USD millions)Comparison of First-Half Years 2006, 2007, 2008

[A possible impact of sub-prime crisis]

Source: Beard, Charles. Sukuk in H1-2008 Key Trends and Market Highlights, Sukuk Research, IFIS.

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5. Future of ICMs

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Thank You