Sukuk is a Shariah-compliant Islamic financial certificate with a unique structure. Sukuk is an ownership interest in a pool of assets rather than a debt obligation. The investors, on the other hand, do not receive any interest. Instead, they get paid a percentage of the assets' revenue.
Malaysia, Indonesia, South Africa, Bahrain, Qatar, Dubai, Luxembourg, and the United Kingdom are among the countries that have issued sukuk.
The Sukuk investment market is expanding globally, and Refinitiv reports that it did well even during the COVID crisis:
In 2020, the market has proved resilient to the impact of COVID-19. In the first nine months of the year, issuance reached a total of $130.5bn, compared with $127.3bn for the same period in 2019.
There are 14 different kinds of sukuk certificates, each with its own form and function. According to a Springer book, all sukuk types can be classified into four categories based on their structure: asset-based, asset-backed, exchangeable, and hybrid.
The following is a list of the most prevalent forms of sukuk invest1ments:
Partners share earnings and losses, and investors participate in decision-making, just like in an unincorporated joint venture.
Although there are fewer international sukuk issuances, Islamic trust contracts (debt) have a greater impact on the domestic market.
Islamic bond that is based on rental income and is often needed to be asset-backed.
Profit and loss sharing is based on equity and frequently at a fixed cost.
Islamic bond based on a project
After al-ijara, agency-based Islamic contracts are among the most popular international sukuk.
An agent is required for contracts with instant purchase and deferred delivery requirements.
The Istisna contract, according to one analysis, has the best likelihood of being acceptable for crowd funding. The pre-practical side of its applicability, on the other hand, is still in progress and requires more research.
Purchasing, reselling, and owing a group of people money are all deemed haraam (forbidden). In the Islamic world, debt cannot be flipped, and one possible workaround is to use Sukuk. Sukuk investments are all issued and priced against the asset they are backed by.
Sukuk must comply with Shariah, the Islamic financial law, and has several characteristics that distinguish it from traditional bonds, including:
Your sukuk crowd funding platform must include the following features in order to comply with Shariah law:
Sukuk investments that meet ESG (environmental, social governance) impact investing criteria are one kind of Shariah-compliant sukuk investments. The limited industries, on the other hand, could include traditional finance, cigarettes, alcohol, pork, gambling, adult entertainment, weapons and defense, and so on.
Depending on how the investment is structured, investment platforms can focus on startup investing, real estate, private funds, or other assets. Musharakah, Murabaha, and Ijara are three of the most popular sukuk contracts.
Almost all sukuk investments are made through a special purpose vehicle (SPV) (special purpose vehicle)
An SPV is created through which sukuk certificates are issued since most, if not all, sukuk investments must have a real underlying value. In this situation, the SPV protects both fundraising businesses and investors while also allowing the development of an asset that serves as the foundation for a sukuk investment.
According to Thomson Reuter’s lexicon and Dummies, murabaha sukuk transactions might be founded on bai-al-inah or tawarruq, both of which are considered problematic. As with any sort of sukuk, there are always two sides: one believes the transaction is Shariah-compliant, while the other disagrees.
Finding out which types of sukuk are accepted in your region and effectively structuring them are the keys to Shariah-compliant investing.
Saudi Market, often known as Tadawul, is a stock exchange platform in Saudi Arabia that is owned by the Saudi Public Investment Fund.
The stock exchange keeps track of the market's listed sukuk, which includes government and corporate sukuk as well as bonds.
Nasdaq Dubai is the Middle East's worldwide financial exchange company and platform. It provides information about the listed sukuk deals as well as tools and activities for companies to help investors make more informed decisions.
CIMB gives access to Sukuk investments as one of the leaders in Islamic Finance. CIMB is a Malaysian universal bank and corporate advisor that specializes in consumer, investment, and commercial banking as well as asset management.
Despite the fact that there aren't as many sukuk investment platforms as there are Shariah-compliant crowd funding platforms, there are more Shariah-compliant crowd funding platforms.
Qardus is one of the UK's first Shariah-compliant financial exchanges. The platform is Shariah-certified, and all companies have passed the Shariah compliance screening. Qardus even has a Shariah advisor who conducts a semi-annual audit.
Forus is a Shariah-compliant P2P lending platform founded in Saudi Arabia that offers compliant investment possibilities to a variety of investors.
In Indonesia, Malaysia, Dubai, and around the world, Ethis is one of the most popular sustainable finance investing platforms. The platform also offers a Shariah-board and is focused on Islamic Finance.
Ethis follows Shariah guidelines and allows investors to participate in halal crowd funding transactions.
Even though Sukuk guarantees profit, in today's economy, profit isn't the only criterion that matters; customer pleasure is equally crucial. As the revenues of Islamic countries rise, Islamic capital markets will become substantially more prominent in the next years.
We have extensive pioneering experience and knowledge in Islamic Banking, and we will collaborate with you to develop the necessary investment, crowd funding, or sukuk trading platform. . For more information regarding the investments in Sukuks contact to Dhanguard we will gladly assist you in every aspect.
Sukuk is basically an Islamic version of Conventional Bonds.
Sukuk signify a form of equity as they symbolize certificates discussing ownership to holders of an asset or pool of assets or entitlement to its cash flows.
Yield is a numerical figure that shows the return that you get on a bond. The simplest form of yield is calculated by this formula: Yield = Coupon Amount/Price.
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