The Uniqueness of The Sukuk Financial Instrument. Theoretical Analysis of The Similarities and Differences Between Sukuk and Shares

Abstract

Sukuk financing plays an important role in modern Islamic finance. It is fundamentally different from classic bonds and is designed to play into the changes in Sharia. The uniqueness of sukuk is that it is based on real assets or a basis for them and provides investors with a profit-free income. This aspect makes it partly similar to stocks, since stocks also allow the investor to receive a share of the property and profit. At the same time, sukuk holders share not only the income, but also the risk, ensuring a fair balance in basic finance. In theory, sukuk and shares have similar aspects. For example, both are traded on the capital market, provide ownership rights, and provide for the sharing of profits and losses. However, there are significant differences between them. While sukuk is fixed-term and backed by a real asset, shares are perpetual and dependent on the overall performance of the company. Also, sukuk income is based on rental or partnership profits, while shares are based on dividends and company value growth. The most important difference is the Sharia requirement: sukuk must be Sharia-compliant, while shares are not. Thus, sukuk and stocks complement each other as financial instruments. While sukuk provides a safe and stable option for those seeking Sharia-compliant investments, stocks carry more risk but offer greater potential for returns. This analysis compares sukuk and stocks to reveal their theoretical underpinnings and provides important scientific and practical insights for financial market participants.