Sukuk: empowering retail investors

The debut of Pakistan’s inaugural listed sovereign Sukuk in December last year, valued at Rs30 billion, on the Pakistan Stock Exchange (PSX), alongside robust investor interest totaling nearly Rs400 billion, has paved the way for the consistent issuance of Shariah-compliant securities. This momentum could catalyse the creation of innovative Islamic capital market products such as Sukuk Exchange-traded Funds (ETFs) and Sukuk tokenisation for retail investors. As anticipated, the Ministry of Finance actively introduced the Sukuk of various durations through the PSX in January 2024 adding instruments for three and five-year tenures. This step has helped in tapping into the liquidity with investors pursuing Shariah-compliant returns and helped the government to get a more favourable rate than the conventional options. In the last five months, the total Sukuk issuance at the PSX has exceeded Rs308 billion (approximately $1.1 billion), and a stable trend is expected to continue in light of the Shariah Court ruling for conversion into the Islamic financial system for government borrowing.