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Muslim Countries in Asia + China are fuelling the move towards ethical asset-backed rather than debt-based financing attracting non-Muslims to align with ESG- with Australia Islamic Money launching late 2025.

Islamic finance is a Shariah-compliant financial system that prohibits interest (riba), speculation (gharar), and investments in industries deemed unethical, such as gambling and alcohol. Instead, it promotes risk-sharing, asset-backed financing, and ethical investment principles.

The Islamic Corporation for the Development of the Private Sector (ICD) has reported that the global Islamic finance industry reached USD 4.19 trillion in assets, with the Asia region contributing USD 859 billion, accounting for approximately 17% of the total market to USD 2.8 trillion, while sukuk (Islamic bonds) increased by 14% in 2021, reaching USD 713 billion.  ICD-PS –

In Asia, Islamic finance is expanding rapidly, particularly in Malaysia, Indonesia, and Pakistan, with growing interest in countries like Singapore and China. Key financial instruments include Islamic banking, where profits are shared instead of interest being charged; sukuk (Islamic bonds), which are asset-backed rather than debt-based; and takaful (Islamic insurance), which operates on a mutual risk-sharing model.

This initiative aims to collaborate with clients, particularly those in carbon-intensive sectors, to explore low-carbon and climate-resilient investment opportunities, thereby supporting carbon reduction and resilience efforts.

The growth of Islamic finance in Asia is fueled by strong demand from Muslim-majority countries, government support, and the increasing appeal of ethical and sustainable financial products. It is also attracting non-Muslim investors looking for alternative investment options that align with environmental, social, and governance (ESG) principles.

Islamic Money Australia launching late 2025 – more information and waiting list here+

 MCCA (Muslim Community Cooperative Australia): Established in 1989, MCCA offers Shariah-compliant home financing and investment solutions, having originated over $3.1 billion in mortgages as of June 2024.

MCCA

While China has yet to establish a comprehensive legislative framework for Islamic finance, these developments indicate a growing interest and gradual integration of Islamic financial principles within the country’s financial system.

Microfinance Initiatives:

• Islamic Relief’s Microfinance Program: Islamic Relief has implemented microfinance programs in China, offering Shariah-compliant financial services to promote financial inclusion and poverty reduction. islamic-relief.org

Collaborative Initiatives:

• Islamic Development Bank (IsDB) and Bank of China (BOC): In early 2024, IsDB and BOC explored potential cooperation, including BOC’s investment in IsDB’s sukuk issuances. This collaboration signifies BOC’s interest in Islamic financial instruments. isdb.org
• Eastspring Investments Islamic China A-Shares Fund: This Shariah-compliant equity fund invests in China’s A-shares market, focusing on equities adhering to Islamic principles, providing investors with exposure to Chinese markets within an Islamic finance framework.

Regional Developments:

• Hong Kong’s Sukuk Issuance: Hong Kong amended regulations for Islamic bonds in 2013 and issued three sukuk totaling $3 billion between 2014 and 2017, demonstrating the region’s capacity to support Islamic finance.
• In late 2024, Saudi Arabia introduced its inaugural Shariah-compliant exchange-traded fund (ETF) focused on the Chinese market. The Albilad CSOP MSCI Hong Kong China Equity ETF attracted over $1.2 billion in investments, directing funds into Chinese companies listed in Hong Kong. This initiative highlights the strengthening financial relationship between Saudi Arabia and China.