Islamic Finance and Wealth Management industry has remained resilient amidst the pandemic according to a study by Alpen Capital (ME) Limited and Alpen Asset Advisors Limited that analyses the impact of the pandemic on the sector.
“Islamic finance and wealth management industry faced the dual shocks of adjusting to the pandemic and historically low oil prices in 2020. While the industry slowed down during the year after experiencing record growth in 2019, it showed resilience and total Islamic finance assets in 2020 are estimated to match the previous year’s figures,” said Sameena Ahmad, Managing Director, Alpen Capital (ME) Ltd.
Factors like growing Muslim population seeking Shariah-compliant financial instruments, rising adoption of technology and the industry’s ability to demonstrate a higher level of ethical credibility have been driving growth.
Islamic Banking accounts for majority of the total global Islamic finance industry assets. The segment has developed at a steady pace in the share of Islamic Banking assets as a percentage of total banking assets has continued to expand year on year.
In 2020, Islamic Banking assets recorded a higher percentage growth as compared to conventional banking assets across select economies like UAE, Saudi Arabia, Oman, Kuwait and Malaysia. The global market for sukuk has developed significantly over the years and in 2019, it contributed 19 per cent to global Islamic finance industry.
Despite initial concerns about the impact of the pandemic on Islamic capital markets, sukuk issuances in 2020 matched the levels seen in 2019.
“Sukuk is expected to maintain its position as a major growth driver for the Islamic finance industry. Sukuk has witnessed record-breaking issuances over the past year, and this is likely to continue,” said Hameed Noor Mohamed, Executive Director, Alpen Capital (ME) Ltd
Within the fast growing Islamic funds segment, Shariah-compliant equity investing provided better protection against the downward risk during the pandemic – the two factors contributed to the outperformance of Shariah-compliant indices were sector allocation (overweight on technology and healthcare sector) and exclusion of highly leveraged companies.
Source: GulfNews