Fundamentals of Islamic Finance and Banking

CHAPTER 11Islamic Investments and Sukuks

Learning outcomes

Upon completion of this chapter, you should be able to:

1. Discuss the conventional as well as the Islamic investment markets and products.
2. Describe Shariah-compliant stocks and the process of Shariah screening.
3. Explain Islamic asset management and the types of Islamic investment funds, including Islamic REITs.
4. Compare Islamic investments with their conventional counterparts and discuss the risks, challenges and Shariah governance and supervision related to Islamic investments.
5. Define Sukuks and their characteristics.
6. Describe Ijara, Istisna, Salam, Murabaha, Mudaraba and Musharaka Sukuks.
7. Discuss the controversies related to Sukuks, as well as their ratings, trading and comparison with conventional bonds.

INVESTMENT MARKETS AND PRODUCTS

The global financial system is a complex system of products, markets, institutions, transactions, legal systems, rules and regulations. A major anchor of the financial system is the financial intermediation by which money flows from those who have a surplus of it to those who have a shortage in an efficient manner and with benefits for both parties, as well as the intermediaries in the middle. The financial intermediaries include banks, as well as credit unions, insurance companies, investment companies, finance companies, brokers, stock exchanges, mutual funds, pension funds, etc. Other participants directly involved with the financial system are governments and their treasury, ...