Shariah investments came under the watchful eyes of regulators from Malaysia to Saudi Arabia in the last week, as new development policies were mulled, even as the full weight of the law was brought upon on delinquents.
Malaysia’s capital markets regulator is seeking public input on regulating tokenized capital market products for both conventional and Shariah investments. The Securities Commission Malaysia (SC)’s consultation excludes cryptocurrencies – focusing instead on digital twin representation tokens and native tokens.
Blade Labs is engaging with regulators in the GCC and Malaysia to expand its Halal blockchain-based financial services securing Shariah approval for its Ujrah-based framework that supports digitalization of Islamic financial products such as Murabahah and Musharakah through its ZeroH platform.
The SC also charged Razrul Anwar Rusli for defrauding five investors of RM3.16 million (US$732,751.15) worth of fictitious investments in Amal Trust, which purportedly offers Shariah compliant investment opportunities with high returns.
The Saudi Capital Market Authority, meanwhile, suspended the license of Mekyal Financial Technologies Company, a crowdfunding platform, due to concerns on the accuracy of its disclosures.
In Dubai, the judiciary acquitted Saleh Malaikah, the former vice-chairman and managing director of Islamic Arab Insurance Company, also known as SALAMA, of all embezzlement and related charges. The court ruled that SALAMA failed to provide sufficient evidence to further the case against Saleh.
India
Elsewhere in the Islamic investment world, India made rare news as Green Portfolio in Gurgaon, Haryana, announced the expansion of non-traditional equity strategies and launch of an alternative investment fund.
The focus on small and mid-cap equities – a segment often overlooked by existing mutual funds – was to expand India’s nascent Shariah investment landscape, Green Portfolio said. The company, operating since 2018, also plans to launch an Islamic alternative investment fund by June 2025.
India’s growth potential for Shariah equity investments is constrained by regulatory hurdles, general caution and inadequate investor literacy in such products, says M.S. Shabbir, founder and managing director of SenSage Financial Services.
NGOs and pension funds – both local and foreign – are showing interest in India’s Shariah space but are not knowledgeable enough in the processes and benefits of these products, adds Shabbir.
Real estate
Shariah-friendly real estate investment trusts extended their hot run from April, with Dubai Residential REIT announcing an IPO of 1.62 billion units which could become the GCC’s largest listed REIT with substantial gross asset value. Dubai Residential’s portfolio comprises a large number of residential units across numerous communities.
Crowdfunding fintech Stake has introduced its inaugural fix and lease Shariah compliant property fund in Riyadh, focusing on a residential tower in the Al Olaya business district. The fund aims to acquire, renovate and lease properties to generate value, with a minimum investment entry of SAR500 (US$133.33).
Deals
Islamic investors in Asia have a new opportunity in the form of Shariah venture debt offered by US-based Atel Capital. After over 200 venture debt deals, Atel Capital has customized an Islamic version of this product.
Gulf International Bank and Stanhope Capital Group are tying up to deliver wealth advisory services to institutional and qualified private clients across the GCC. The alliance will broaden GIB’s service offerings and enable Stanhope to expand its presence in the Arab world markets.
Arcapita Group Holdings, a Shariah compliant alternative investments firm, acquired a majority stake in Trustpoint.One, a US-based provider of tech-enabled legal services. The acquisition provides Arcapita with exposure to the recession-resilient US legal services market, which is estimated to be over US$400 billion.
Lesha Bank has announced that its wholly-owned subsidiary in Saudi Arabia, Lesha Capital, has received in-principle approval from the Saudi Capital Market Authority to operate in the Kingdom. Lesha Capital’s business activities will include managing investments, operating funds and providing advisory services.
Next to Singapore, in the southern state of Johor in Malaysia, Asia Vision Capital has launched a Shariah compliant real estate fund focused on the activities of the Quayside JBCC project in Johor. The venture capital firm aims to raise up to RM300 million (US$70.33 million) for the fund, which will be tied to the broader Johor-Singapore Special Economic Zone.
In Nigeria, the Al-Habibiyyah Islamic Society is initiating the use of Waqf, an Islamic endowment, to address community development and poverty reduction. The Al-Habibiyyah Waqf Foundation is part of the society’s broader developmental efforts in collaboration with the McArthur Foundation.
UAE’s first Islamic digital bank, ruya, will roll out new Shariah financing and investment instruments as part of its growth strategy for 2025. The bank’s investment pipeline includes Halal stocks, exchange-traded funds, private assets and fractionalized Sukuk, offered through partnerships on its digital platform.
Fund values, returns
Asia Pacific’s Islamic equity funds experienced a 4.55% drop in assets under management (AuM) during Q1 2025 compared to the previous quarter, according to the IFN Investors Fund Database. Malaysia, the largest market in the region, saw a decrease in AuM as well, while Indonesia and Pakistan were the only ones that registered growth.
In the US, Islamic funds saw a 15.09% drop in asset value in Q1 that took its AuM from US$10.77 billion to US$9.14 billion, according to the IFN Investor Funds Database. This decline coincided with the lower average three-month return of approximately -3.29% for US Islamic funds from Q1 2025 to Q2 2025, a downturn caused by market swings and economic pressure culminating from the Trump presidency’s tariff wars.
ESG Sukuk’s share in total ESG debt issued in emerging markets, excluding China, significantly increased to over 50% in Q1 2025, up from 20% in 2024. Global outstanding ESG Sukuk reached approximately US$50 billion in the quarter, showing a substantial year-on-year growth of 21.6% that outpaced the overall global Sukuk market’s growth.
Malaysia’s PMB Investment announced an income distribution of RM0.04 (US$0.01) per unit for the PMB-An-Nur Waqf Income Fund – equivalent to a total gross distribution of RM1.09 million (US$255,316) – for the year ended the 30th April 2025. As the Islamic fund’s manager, PMB Investment said the distribution reflects a 5.92% yield, calculated on the net asset value of RM0.72 (US$0.17).
