Islamic finance strengthens emerging market connectivity

By Milan Rojan

Standard Chartered has highlighted Bahrain’s potential to strengthen cross-border Islamic finance connectivity as growing pools of Islamic capital have remained concentrated in a limited number of markets.

The study has found that only 6% of global sukuk capital has reached South Asia and Africa, despite global Islamic finance assets approaching $6 trillion. The findings have pointed to an opportunity to improve financing and investment corridors between Islamic capital markets and high-growth emerging economies.

The report has identified cross-border connectivity as a key driver of the next phase of Islamic finance growth. It has highlighted the need for stronger financial, trade and digital infrastructure to enable Shariah-compliant capital to move more efficiently between markets.

Bahrain has been positioned as a potential connector within these emerging corridors, supported by its established Islamic finance ecosystem, regulatory framework and financial services sector. The Kingdom has developed its position as a regional centre for Islamic finance and has continued to support the development of Shariah-compliant financial services.

Khurram Hilal, CEO, Group Islamic Banking, Standard Chartered, has said Islamic finance has become an important enabler of cross-border connectivity as trade, investment and capital flows have become increasingly interconnected.

He has added that the challenge for many markets has not been a shortage of liquidity, but the ability to connect available capital with opportunities across borders. Financial institutions with capabilities spanning capital markets, financial infrastructure and digital connectivity have therefore become increasingly important, according to Hilal.

Shaikha Tareef, Acting CEO, Standard Chartered Bahrain, has said Bahrain’s regulatory framework, market expertise and focus on innovation have supported its position as a centre for Islamic finance.

The report has also identified evolving trade corridors between the GCC, Asia and other emerging markets as potential areas for growth in Islamic trade finance, cross-border investment and capital mobilisation.

Private credit, infrastructure finance, digital assets and tokenisation have been highlighted as additional areas that could support the expansion of Islamic finance.

Standard Chartered has said its international Islamic banking franchise has supported clients across these markets through Shariah-compliant financing solutions and cross-border capabilities, as institutions have sought to connect Islamic capital with emerging investment and trade opportunities.