What is Sukuk?
The Sukuk is an Islamic financial instrument, an analogue of bonds, which complies with Shariah standards. Unlike traditional bonds, the sukuk does not provide for interest payments (riba), but provides investors with a share in a real asset and income from it. The funds from issuance of the sukuk are directed to profitable projects (real estate, infrastructure, business), and the income is distributed among investors, in proportion to their contributions.
- Principles of the Sukuk in Islamic Finance
- Prohibition of interest (riba): income is generated from real assets, but not fixed payments.
- Prohibition of speculation (gharar): assets shall be real, transactions shall be transparent.
- Prohibition of gambling operations (maysir): investments are not associated with gambling risks.
Types of the Sukuk
- Sukuk Ijara is based on the lease of assets (real estate, equipment).
- Sukuk Mudaraba is a joint venture instrument, with profit sharing.
- Sukuk Murabaha is financing purchase and resale of goods.
- Sukuk Istisna'a is used for construction and production.
- Sukuk Waqf is intended for charitable purposes.
Halal Investment Products at Freedom Broker
1. The ITS trading platform offers the ITSS ETF. It tracks the ITS Shariah index which is calculated based on the stock prices of companies that comply with the Shariah standards. You can learn more about this fund at the following link:
https://fbroker.kz/products/itss
2. The US stock market trades exchange-traded funds that invest in stocks, the sukuk and the Islamic real estate REITs:
- HLAL - Wahed FTSE USA Shariah ETF
- UMMA - Wahed Dow Jones Islamic World ETF
- SPUS - S&P 500 Sharia Industry Exclusions ETF
- SPSK - SP Funds Dow Jones Global Sukuk ETF
- SPRE - SP Funds S&P Global REIT Sharia ETF
- RITA - ETFB Green SRI REITs ETF
You can purchase shares of these funds in the Freedom Broker mobile app.
3. The Kazakhstan Stock Exchange (KASE) lists Islamic financial certificates issued by government agencies in Hong Kong, Saudi Arabia and Malaysia. These instruments have high credit ratings and comply with the Sharia requirements.
- Bonds of the Government of the Hong Kong Special Administrative Region of the People's Republic of China (ISIN: XS1555404786)
- Bonds of the Ministry of Finance of the Kingdom of Saudi Arabia (ISIN: XS1599284202)
- Bonds of the Ministry of Finance of the Federation of Malaysia (ISIN: USY57542AA32)
Please send a request to [email protected], for the questions regarding investing in individual sukuk securities.
The information does not constitute an investment advice. Investments involve risks.