Nowadays, property companies or investing in debt securities

Nowadays, the evolution of Islamic capital market instruments has been
increased in recent years. There are three Islamic capital markets which are Shariah
compliant securities, sukuk and Islamic real estate investment trust (I-REITs).
Capital market is an essential element of financial system where company can
raise their long term funds. The part that assembles the financial assets proficiently
In the Islamic Finance Industry is The Islamic Capital Market (ICM). The first Islamic
capital market that we discuss is Shariah compliant security. Ordinary shares, transferable
subscription rights and warrant of a Bursa Malaysia-listed company are the
items in Shariah-compliant securities. This security will be evaluated whether
it is compliance with Shariah principles or not in term of its primary business
and investment activities. In the process of determining the Shariah status of
listed securities, the Shariah Advisory Council (SAC) established a Shariah
standard for evaluating activities which are quantitative assessment and qualitative
assessment. During quantitative assessment, the SAC received support and input
from the Security Commission (SC) in term of gather any data and information regarding
company activities from various sources, such as annual financial reports. Organisation
or company will be classified as Shariah Non-compliance Company they involve in
certain criteria such as financial services based on riba, gambling and gaming.
After that, there are two criteria under qualitative assessment to determining
the Shariah compliancy of company which are image of company must be good and
the main activities of the company have importance and maslahah to Muslim ummah
and country. Next, other Islamic Capital Market is sukuk or also known as
Islamic bond. Sukuk  represents
certificates of equal value that represent an undivided interest in the
ownership of an underlying asset , usufruct, services or investment in
particular projects or special investment activities. Besides that, REITs is a collective
form of investment and is used to invest in real estate only. The venture is generally
through purchasing, managing, selling and renting real estate or purchasing
shares in public-listed real property companies or investing in debt securities
of real property companies.

 

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In the recent years, there are several
issues arise in Islamic Securities, Sukuk and Islamic Reits. Under Islamic
Securities, first situations of issue exist is Shariah-compliant securities which are subsequently considered Shariah non-compliant.
This issue happen when at early, securities were classified as Shariah compliance
securities but subsequently changes to Shariah non-compliance securities caused
by certain reason like changes in company’s operation. In this case, investor
should liquidate or dispose the Shariah non-compliance securities and can keep
any capital gains from that disposal at the time of announcement. However, any
excess capital gain should be channelled to charitable bodies or baitulmal if it was derived from the
disposal after the announcement day. Meanwhile, if the market price of the securities
is below the original investment costs, investors are allowed to hold their
investment in the Shariah non-compliant securities.