Amid the recent hoopla of Shariah compliant equities and market instruments outperforming their conventional counterparts, there is an undercurrent that the upward earnings momentum for these investments has yet to be fully tapped — especially offers reaching out directly to retail investors.
While many fintechs have so far embraced this potential via token assets, eyes opened wide when a brick-and-mortar bank joined this bandwagon. Emirates Islamic is pitching fractionalized Sukuk to retail investors with a minimum US$25,000 entry point and another recent example is Malaysia Building Society partnering with UAE fintech Fasset to create digital asset offerings on its banking platform while Inablr is raring to issue fractionalized asset classes, having exited the Bahrain regulatory sandbox recently. We also learned that Shariah compliant ESG digital exchange Green-X is planning to roll out at least 10 new tokenized offers this year alone.
Property, an Islamic investment darling, continues to be on the radar. Despite lower transaction volumes in Saudi Arabia (likely due to assets being more expensive), product suppliers and investors are not slowing down, as seen this week with Shariah compliant Alistithmar Capital joining hands with Ezdihar Real Estate Development Co to establish a SAR1.1 billion (US$293.08 million) property fund. Emirates REIT, the GCC’s largest Shariah compliant REIT, confirmed with IFN Investor it plans to return itself to positive funds from operation territory after generating double-digit growth in 2023.
The much-anticipated US Federal Reserve rate cut did not happen last week, deflating the flow of cheaper cash into equities and further dampening overall sentiment of conventional investments. Meanwhile, the three-day IsDB event saw 53 agreements worth US$6.49 billion inked for various initiatives. The question now is how these developments will play out on the global investment landscape.
Malaysia’s Bursa Carbon Exchange confirmed that it will hold its second offering this month in a bid to become a fully Shariah compliant ESG product exchange. This push for Islamic ESG is in line with a study by technology provider Mambu which found that Muslim millennials and Gen Z want to invest their money in ethical causes or instruments that support social good while respecting their religious beliefs. This is shaping the way investment managers are designing their products, at both retail and institutional levels.
