Islamic Capital Market crosses trillion-dollar mark
Rising sukuk issuance and Islamic investment funds position the Islamic Capital Market as a core pillar of ethical capital formation.
The Islamic Capital Market (ICM) continues to consolidate its role as one of the fastest-growing segments of the global financial system, driven by sustained sukuk issuance, expansion of Islamic investment funds, and growing global demand for ethical and Shariah-compliant investment solutions.
Global Islamic finance assets reached an estimated $5.2 trillion in 2025 and are projected to approach $6 trillion by the end of 2026, reflecting steady growth across banking, takaful, and capital markets.
Within this ecosystem, the Islamic Capital Market has emerged as a key growth engine.
Outstanding global sukuk have surpassed the $1 trillion mark, while annual sukuk issuance continues to range between $150–200 billion, led by key markets including Malaysia, Saudi Arabia, the UAE, and Indonesia.
Sukuk instruments are increasingly being utilised for sovereign financing, infrastructure development, energy projects, and corporate funding, underlining their growing relevance in mainstream capital markets.
Beyond sukuk, the Islamic Capital Market now spans Shariah-compliant equities, Islamic investment funds, ETFs, REITs, indices, pension structures, and liquidity management instruments.
Islamic investment funds manage assets exceeding $350 billion globally, supported by improved regulatory oversight, stronger Shariah governance, and more standardised screening methodologies.
The expansion of Islamic indices and ETFs has further enhanced market accessibility, allowing both institutional and retail investors to engage with Shariah-compliant assets more efficiently.
Mr Muhammad Zubair Mughal, Chief Executive Officer of AlHuda Centre of Islamic Banking and Economics (AlHuda CIBE), stated: “Islamic Capital Markets are no longer a niche alternative.
They have become a strategic pillar of the global financial architecture, offering asset-backed, risk-sharing, and ethically aligned investment solutions.
The continued growth of sukuk, Islamic funds, and Shariah-compliant capital market instruments reflects a global shift toward responsible finance that serves both economic and social objectives.”
Mr Mughal further emphasised that non-Muslim investors are increasingly participating in Islamic Capital Market products due to their strong alignment with ESG principles, transparency, and real-economy linkage, particularly in infrastructure, energy, and sovereign financing.
AlHuda CIBE has been actively contributing to the development and strengthening of Islamic Capital Markets through advisory, research, and capacity-building initiatives across multiple jurisdictions.
The institution supports regulators, financial institutions, and capital market players in sukuk structuring, Islamic fund development, Shariah governance frameworks, and regulatory alignment with international standards such as AAOIFI and IFSB.
Its engagement spans sovereign and corporate sukuk, Islamic collective investment schemes, and Shariah compliance systems for capital market operations.
Looking ahead, the Islamic Capital Market is expected to maintain strong growth momentum, supported by continued sovereign sukuk issuance, ESG-driven investment trends, regulatory support in key jurisdictions, and technological advancements such as digital sukuk platforms and fintech-enabled Shariah investing.
The writer is the Assistant Manager Communication (Alhuda Centre of Islamic Banking and Economics)