Investors in Islamic bonds have been facing dramatic losses for the first time in more than three years in the second quarter as concerns rise over the US Federal Reserve’s decision to withdraw monetary stimulus which resulted in a rally that returned 33 per cent.
Global sukuk have tumbled 3.4 per cent in the three-month period, the first drop since the fourth quarter of 2009, according to HSBC/Nasdaq Dubai data reports, compared with a 3 per cent decline for the Bloomberg US Treasury Bond Index.
Islamic debt returned 0.5 per cent in the first quarter compared with little change in the Treasury index.
Redemptions from emerging-market bond funds hit a 90-week high in the week ending June 19, according EPFR Global data.
Sukuk had benefited from a boom in Islamic finance, with Ernst & Young forecasting a surge in the industry’s assets to US 1.8 trillion this year from US 1.3 billion in 2011.
In January, sharia- compliant yields fell to a record low before a 57 per cent jump to date, linked largely to speculation that the Fed will scale back its bond buying as the US economy improves.