Islamic finance market growth slowed in 2009

The global market for Islamic financial services increased by an estimated 25% by the end of 2008. The market was worth around $951 billion by end-2008.

Despite this growth the Islamic finance sector has been affected by the downturn in the global economy. Asset growth slowed in 2009 according to the Islamic finance report from International Financial Services London (IFSL), an independent organisation.

The sukuk (Islamic bond) market, despite a 30% recovery in issuance from a low of $15 billion in 2008 to $20 billion in 2009, is facing its first stress test with several defaults. Despite this, quality sukuk issuers continue to attract demand from investors.  

There was less activity in Islamic financing in London in 2009. Only two Sukuk listings were made on the London Stock Exchange (LSE) compared with three in 2008 and 12 in 2007.

Last year there were three fund launches compared with six in 2008.

The latest data estimates that the total number of Shariah compliant funds totalled 680 funds by end-2008 having risen more than threefold from around 200 in 2003.

The total value of these funds has grown from $20 billion in 2003 to $44 billion in 2008.

The report said the UK’s position as the key Western hub for Islamic finance remains strong. London’s total of 22 banks offering Islamic finance products is the largest market of any Western country. The LSE’s 20 sukuk listings worth $11 billion are second only to Dubai.