Connector of liquidity: channelling capital through cross-regional corridors

Cross-regional corridors do more than support trade; they also shape how liquidity is channelled into investable opportunities. For Islamic finance, this creates a connector role: using familiar structures, governance frameworks and distribution channels to help capital move more efficiently across public and private markets.

Corridor liquidity is deepening, but the supply of investable opportunities remains too narrow

Across the Global South, liquidity remains concentrated in deeper GCC and ASEAN markets, while financing needs continue to grow across South Asia and Africa.

Islamic capital reflects the same imbalance: capital is expanding, supported by Islamic financial institutions in core markets and growing participation from conventional investors, but investable opportunities remain too narrow.

In 2025, Islamic funds rose 37 per cent in value and sukuk issuance increased 14.5 per cent, lifting outstanding sukuk above USD1 tn¹⁷. Yet activity remains concentrated in core markets and familiar issuer segments, limiting diversification across regions, sectors and asset types.

Islamic finance can help address this gap by turning financing demand in underpenetrated markets into investable opportunities. Recognised structures, established governance frameworks and familiar distribution channels can connect Islamic liquidity with issuers and borrowers seeking capital across public and private markets.

17. LSEG, Islamic Investment Review 2025.

18,19. LSEG, Islamic Investment Review 2025.

Private market pathways: extending Islamic liquidity beyond the scope of public markets

Public capital markets may not meet all funding requirements for every financing requirement. Some assets, borrowers and projects require more tailored structures, longer tenors or closer monitoring than listed markets typically provide. In this context, private credit is not simply a new asset class opportunity. It is another mechanism through which Islamic finance can help channel capital across corridors and into underpenetrated markets. This is where private credit is becoming particularly relevant.

Overall private credit allocations to emerging markets reached a record USD22.3 bn in 2025²⁰, as banks tightened lending and investors looked beyond increasingly crowded developed market opportunities. This points to increasing investor participation across a broader range of emerging market private credit strategies. For both Islamic and conventional financial institutions, this reinforces the importance of capital pathways that can support the movement of liquidity across markets and into a broader range of financing activities.

Africa provides a useful example of how corridor-based private credit activity is developing. Financing gaps remain substantial, with an SME funding gap across sub-Saharan Africa and unmet trade finance demand estimated at USD74 -92 bn in 2024²¹. At the same time, private debt momentum is building, with African private debt deal volume rising 57 per cent in 2025²² and activity increasingly linked to sectors such as agriculture, energy, financial services and infrastructure.

Private wealth, including family offices and high-net-worth individuals could become an additional channel for Islamic liquidity. In the GCC and Asia, private wealth is increasingly seeking diversified sources of income and resilience as geopolitical volatility, market uncertainty and crowded public market exposures shape allocation decisions. This creates an opportunity for financial institutions to connect institutionally originated assets – such as trade, receivables, infrastructure and working capital exposures – with private wealth channels seeking asset-linked, income-generating exposures. For Islamic finance, the relevance lies in structuring these exposures in formats that are Shariah-compliant, accessible to private capital and capable of being serviced and monitored over time.

Private market pathways can therefore extend Islamic liquidity to a broader set of opportunities, including:

Mid-market corporates whose financing needs are too small or infrequent for benchmark issuance
Infrastructure and project financing deals that require longer maturities and tailored financing structures
Trade- and receivables-linked assets where stable cashflow generation is more important than public market visibility
Sponsor-backed or asset-specific transactions that are better suited to private or syndicated arrangements.

20. Reuters, Private credit in emerging markets surges to record, industry group says, 2026 | 21. African Development Bank, AM2026: AfDB 2025 Trade Finance Report Highlights Resilience of African Financial Institutions After Covid-19, 2026.
22. AVCA, 2025 African Private Capital Activity Report.