By IINA,
Manama : The Islamic and conventional fund industry in Bahrain is one of the fastest growing segments of the financial sector. With more than $16 billion in assets under management, through more than 2,500 funds, the industry has been growing at an annual average of about 20 per cent in recent years. “These are interesting times, particularly for those of us in the business of banking and finance,” Central Bank of Bahrain (CBB) Governor Rasheed Al Maraj told delegates at the opening of the Fourth Annual World Islamic Funds and Capital Markets Conference at the Gulf International Convention Centre here yesterday. “The economic boom in the GCC region is well underway and is being manifested in all segments of the economy,” he said.
“This has generated significant new business for financial service providers across the board, be the banks, insurance firms, asset managers or capital market participants. “The growth in the Islamic funds and capital markets is reflective of the surge sweeping through the region’s financial services industry.” He said the Bahrain Stock Exchange’s (Islamic bonds) sukuk market had grown significantly, with the total size of sukuk listings currently more than $3bn, double that from five years ago. The CBB, having pioneered the development of sukuk, remained active in the sovereign 1sukuk market, with a total of $1.69 billion medium to long-term sukuk issued, complemented by a regular program of short-term issuance.
Recently, the CBB issued its second international sukuk, worth $350 million, which is listed on the London Stock Exchange, along with a previous issue of $250 million. Last year, the regulatory framework for collective investment undertakings (CIUs) and in keeping with Bahrain’s leadership in Islamic finance, the new CIU rules also provide a solid foundation for the establishment and management of funds that comply with Islamic principles. “The CBB is actively supporting a number of Islamic capital market-related development initiatives, being undertaken by the International Islamic Financial Market (IIFM), which the CBB chairs,” Gulf Daily News reported quoting him. “Another Bahrain-based organization, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has also recently issued a statement on sukuk, providing important guidelines for sukuk issuers. “It is the CBB’s hope that such initiatives will go a long way in harmonizing market practices and creating a deep and vibrant Islamic capital market, which though growing significantly, remains small.”
“There is a limited number of Islamic issuance in comparison to the conventional fixed-income market,” he said adding the Islamic finance industry should put substantial resources into creating a vibrant secondary market, including risk management products for Islamic investors and developing Sharia-compliant hedging mechanisms.