The global authority for Islamic finance is holding off on a planned change to rules for sukuk after an outcry from investors that the move would upend the $1 trillion market https://t.co/SNqiyWpsKh ...

Core Viewpoint - Hong Kong is positioning itself as an Islamic finance hub in North Asia, with increasing interest from companies in issuing sukuk bonds to attract Middle Eastern capital into the Greater Bay Area [1][2]. Group 1: Sukuk Bonds and Market Infrastructure - There has been a notable rise in inquiries from companies regarding the issuance of sukuk bonds in Hong Kong, indicating potential future transactions [2]. - Hong Kong possesses a "world-class financial market infrastructure and deep capital markets," making it an ideal conduit for Islamic capital into mainland China [2]. - The city has a legal framework supporting the issuance of sukuk and other sharia-compliant instruments, with the government having issued over US$3 billion in sukuk a decade ago [3]. Group 2: Recent Developments in Islamic Finance - In November 2023, Hong Kong launched Asia's first exchange-traded fund (ETF) tracking the largest companies in Saudi Arabia, alongside an ETF for sukuk government bonds listed earlier in the year [4]. - Last year, two Hong Kong stock ETFs were also listed in Saudi Arabia, showcasing the growing integration of Hong Kong's financial market with Islamic finance [4]. Group 3: Government Initiatives and International Collaboration - The Financial Secretary of Hong Kong plans to lead a delegation to Saudi Arabia, focusing on sectors such as artificial intelligence, biotech, fintech, and green energy, to bolster Islamic finance and cross-border financial products [5]. - Standard Chartered has been actively assisting clients in issuing sukuk globally, including the sukuk issued by the Hong Kong government ten years ago [5].

Regulatory Landscape - Sovereignty versus decentralization is a key challenge, exemplified by India's state rails approach to private crypto [1] - Enforcement is intensifying, with Dubai's penalties demonstrating that compliance is mandatory [1] - Licensed innovation is accelerating, while "unbacked" assets are facing headwinds [1] Market Opportunities - Stablecoins are exploring opportunities in Islamic finance, with Malaysia aiming to tap into the $5 trillion market [1]