(MENAFN - Qatar News Agency) JKFH-Research, a subsidiary of Kuwait Finance House Group (KFH-Group), says in a report published Friday that the Islamic finance industry will continue to grow driven by both demand and supply factors, and further facilitated by government agencies and financial regulators.
The report, which focuses on 2014 Islamic finance expectations, forecasts that Islamic finance industry will continue to draw tremendous double digit growth rates across all sectors, Kuwait news agency KUNA reported. Moreover, the report forecasts that the total Islamic finance assets will reach USD 2.1 trillion by the end of 2014, and the total asset of Islamic banking sector to reach USD 1.6 trillion. The Islamic finance industry's assets are estimated to have amounted to USD 1.8 tln as at end-2013, recording an over 16% y-o-y growth, says the report. Leading the growth has been the Islamic banking sector which represented an almost 80% share of the global Islamic banking assets in 2013.
Among the largest global Islamic banking jurisdictions (excluding Iran) in 2013 are Saudi Arabia which captured 18% of global Islamic banking assets, followed by Malaysia (13%), UAE (7%), Kuwait (6%), and Qatar (4%), says the report. In 2014, the Islamic banking sector's assets are expected to reach USD 1.6 tln. Advanced Islamic banking markets in the GCC and Asian regions are expected to evolve in greater sophistication in terms of products offerings, as well as from the aspect of regulatory advancement by the financial regulators, says the report.
On the demand side, Shari'a compliant investments and financing products have been dominantly fuelled by a promising economic outlook in the GCC and abundant liquidity flows, the report adds. In 2013, the sukuk market, managed to once again breach the USD 100 bln mark in terms of new sukuk issuances to close the year with a total of USD 119. 7 bln. However the amount fell 8.77% short of the recorded amount in year 2012, says the report.
It adds that Malaysia once again led the 2013 new sukuk with a 69% share of total issuances, followed by Saudi Arabia at 12%, United Arab Emirates (6%), Indonesia (5%) and Turkey (3%). The global sukuk market is all set to continue its upward trajectory in 2014 as a number of high profile debut sovereign issuances are expected to take place this year. The sovereign sukuk sector will continue to stoke stakeholders' interest in 2014 as sovereigns including the United Kingdom, Ireland, South Africa, Tunisia, Mauritania, Senegal, Luxembourg and Oman are expected to debut issuances in 2014, says the report. It further says that expectations are also to build up on a debut sukuk issuance from the multilateral Asian Development Bank (ADB).
Meanwhile, the Islamic Development Bank (IDB) has already announced its intention to issue a USD 10 bln sukuk in the Dubai NASDAQ Exchange in 2014 with plans to continue similar listings on an annual basis. The Islamic funds segment also registered an 8.4% year-to-date increase in 2013 with total assets under management (AuM) valued at USD 72.5 bln as at 20-Dec-13. A total of 79 new Islamic funds were launched in 2013 with most of the newly launched Islamic funds domiciled Malaysia and Luxembourg, says the report.
In 2014, the global Islamic funds industry should benefit from steady global economic recovery which will bolster investor confidence and performance of underlying invested assets. Much of the anticipated recovery will come from the advanced economies, while the growth trajectory of emerging countries will remain stable. In this light, greater investor focus will be placed on policy decisions and reforms in individual emerging economies, says the report.
The global takaful industry has experienced strong double-digit growth rates in recent years with worldwide gross takaful contributions estimated to have amounted to almost USD19.87bln as at end-2013, reflecting a more than 15% y-o-y growth while recording an impressive 18.1% CAGR during the last 5 years (2007-2012), says the report. Saudi Arabia and Malaysia continue to drive the global takaful industry being the two largest takaful markets in terms of total gross contributions, KUNA reported. In 2014, gross contributions of the global takaful industry are expected to surpass the USD 20 bln mark.
The growth opportunities for the global takaful industry in 2014 and beyond are optimistic on the back of several economic, financial and socio-demographic trends. A number of regulatory developments and government policies that have been put in place are expected to spearhead the growth of the takaful and insurance sectors in various markets during 2014, says the report.