HSBC analyst Andre de Silva recently released a report discussing the rapidly expanding market for sukuk instruments, more commonly referred to as Islamic bonds. The global sukuk market has expanded by an average annual rate of 40 percent since 2000, and it has now reached a size of about $322 billion.

In the report, Silva provides an overview of the market, discusses some facts about Islamic bonds and answers some common questions about the instruments.

Shariah Principles

Sukuk structures must comply with Shariah principles. While the rules can vary from region to region, there are three fundamental prohibitions: “riba” (interest), “maysir” (gambling or speculation) and “gharar” (unnecessary risk).

There are more than 14 types of sukuk structures, but Silva groups them into three main categories:

1. Project-based instruments used to finance a specific project

2. Asset-backed instruments that serve to transfer the benefits of assets to investors

3. Balance sheet-specific instruments that help fund multiple projects

Sukuk Facts

The first sukuk-like instruments appeared…

Click here to continue reading

Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!