IslamicFinance.de

According to investment management firm Franklin Templeton, the global sukuk market is set to grow at a compound annual rate of around 15% to reach $2.7 trillion by 2030. Global sukuk issuance stood at over $477 billion at the end of last year, but has slowed somewhat in recent years. Ratings agency S&P in January described sukuk issuance as 'mild' in 2018, as the total amount of sukuk issued dropped by 5% to $114.8 billion. It forecast issuance of $105 billion-$115 billion for 2019. Mohieddine Kronfol, head of fixed income at Franklin Templeton, forecasts that the growth continues at a relatively rapid pace. In GCC markets several corporate entities have been issuing debut sukuk in recent months. Saudi Telecommunications Company issued its debut $1.25 billion sukuk on Sunday, following on from Saudi food company Almarai’s first $500 million sukuk in February.

Franklin Templeton is evaluating opportunities to expand its Shariah business, which grew 32 percent in 2017. Franklin Templeton funds have become Qualified Foreign Investors (QFI) in Saudi Arabia, allowing the funds to invest directly in the kingdom’s stock market, it was announced on Monday. Sandeep Singh, Franklin Templeton’s regional head of Central and Eastern Europe, Middle East and Africa and head of Islamic Business said, that they operated in the Middle East and North Africa for almost 20 years and that they will remain dedicated to growing their business alongside the region’s growth.

The Middle East conflict raises concerns over the general outlook for the sukuk market. But portfolio managers remain positive both on fundamentals and technicals for sukuk as they also offer a potentially attractive alternative amid prospects of rising interest rates. Sukuk are considered as an attractive option for those whose mandate allows to test new boundaries. Mohieddine Kronfol, chief investment officer of Global Sukuk and MENA fixed income at Franklin Templeton Investments said, that "the lower duration and persistent strong demand from Islamic financial institutions should continue to support the market and allow it to perform well relative to other fixed income sectors, particularly those that have higher average durations."

Mark Mobius will lead the Templeton Shariah Asian Growth Fund that is to be launched at the end of this month by investment house Franklin Templeton. The initial seed capital of the fund is $5mn. Mobius expects the sector to grow significantly in the coming years. Franklin Templeton is also launching a Global Sukuk Fund, with $20mn of seed money to invest in Islamic bonds, and a Shariah Global Equity Fund, with $5mn of initial capital.