Malaysia

Shariah investments continue growth spurt in SE Asia

According to the latest Cerulli Associates research, Shariah-compliant investments are gaining further ground in Asia. Growth continues to be concentrated in South-East Asia, with Malaysia remaining at the forefront with $28.4bn in Shariah mutual fund assets under management (AUM) in 2017. Last year, Malaysia’s Securities Commission launched a five-year blueprint to grow the sector. Indonesia grew its Shariah mutual fund market by 90% to nearly $2bn in AUM in 2017. Besides allowing Shariah funds to fully invest overseas, market regulator Otoritas Jasa Keuangan (OJK) recently introduced a framework requiring fund managers to carve out dedicated units to manage existing Shariah funds. The Cerulli survey shows that asset managers in the country expect demand for Shariah investments to come mostly from insurers and pensions over the next few years.

Dr M To Deliver Teleconference Address At Sarajevo Halal #Fair

Malaysian Prime Minister Tun Dr Mahathir Mohamad has agreed to deliver a keynote address, via teleconferencing, at the three-day Sarajevo Halal Fair. Bosna Bank International's CEO Amer Bukvic announced that the fair would begin on the 27. of September and he invited more Malaysian companies to set up business in Bosnia and Herzegovina. Bukvic added that the country aims to become Europe’s halal hub and they need help from Malaysia. The Sarajevo Halal Fair is jointly organised by Bosna Bank International, Saudi-based Islamic Development Bank and Islamic Development Bank Group Business Forum and supported by Malaysia’s Halal Industry Development Corporation.

BNM introduces Rahn policy document

Bank Negara Malaysia (BNM) has issued the Rahn policy document which is aimed at strengthening the practice among Islamic financial institutions to offer services that are end-to-end Shariah-compliant. BNM stated that the subject matter of the Rahn contract shall be collateral that is recognised by Shariah and Shariah-compliant liability or obligation owing to the pledgee. It added that the collateral must be owned either by the obligor, a third party, or the obligor and a third party. BNM said the collateral shall be immediately possessed by the pledgee upon entering into the Rahn contract unless a pledgee approves a delay in possession. A Rahn contract is applicable with contracts including qard, murabahah, tawarruq, baiinah, istisna, ijarah, kafalah, mudarabah, musyarakah, wakalah bi al-istithmar, and wad as well as takaful coverage.

#Malaysia's use of Islamic bonds to fund deficit credit positive: Moody's

According to Moody's Investor Service, the Malaysian government is increasingly using longer-term Islamic instruments to fund its deficit to lower liquidity risk. The shift toward Islamic financial instruments is seen as credit positive for the sovereign. The Malaysian government has a sizable debt burden currently at 50.8% of the country's gross domestic product (GDP). The Malaysian Government Investment Issues (MGII), local currency, Shariah-compliant debt instruments, accounted for 50% of total federal government financing in 2017, up from a 26.4% share in 2008. The country's active participation in Islamic finance is part of Malaysia's broader vision to position itself as an international center for the instrument, and a recognized goal in the central bank's financial sector master plan.

BIMB Invest eyes RM100m for Shariah-ESG #fund within 1 year

BIMB Invest is expected to achieve a subscription of RM100 million of its BIMB-Arabesque ValueCAP Malaysia Shariah-ESG Equity Fund within a year. The fund was launched together with Arabesque Asset Management and ValueCAP and approved by the Securities Commission Malaysia. As the fund is mainly targeted at corporate and institutional investors, BIMB Invest is hoping to get the likes of pension funds, insurance and takaful firms on board. The fund will invest in about 100 local listed companies that are Shariah-compliant as well as in line with ESG practices. It will analyse the ESG factors of each company using Arabesque’s proprietary methodology, the Arabesque S-Ray, which daily assesses the performance of companies.

#Malaysia: BIMB Investment targets RM100m for Shariah equity fund

BIMB Investment is targeting RM100 million in subscription for its newly launched BIMB-Arabesque ValueCAP Malaysia Shariah-ESG Equity Fund. The fund will be invested in 100 local shariah compliant companies listed on Bursa Malaysia. BIMB Investment CEO Najmuddin Mohd Lutfi said the investments would be based on selected companies that have strong financial standing. He said companies who are interested to increase their social responsible investment (SRI) and Environmental, Social and Governance (ESG) portfolios should also tap into this fund.

Why #Malaysian bonds are set to attract investors despite emerging-market jitters

With the improving quality of issuances, Malaysia is set to attract more investments into its growing bond market, say panellists at The Asset Malaysia Issuers and Investors Leaders Dialogue in Kuala Lumpur.

#Malaysia to retain position as world's premier #sukuk issuer

Malaysia will remain the market leader in global sukuk issuance despite recent delays and cancellations of mega projects. CIMB Islamic Bank CEO Rafe Haneef said the delays of some mega projects would have some impact sukuk deals, but it is still business as usual for Malaysia. Last year, Malaysia had issuances of over US$50 billion. According to Moody’s Investor Services, Malaysia continues to remain the world’s largest sukuk with an estimated 44% of total sovereign sukuk outstanding in 2017. Issuance grew 17% in 2017 to some US$100 billion. CIMB Investment Bank topped Bloomberg’s Underwriter League Table for ringgit bonds for 12 years running. Going forward, Rafe expects issuances will come from both the infrastructure and corporate space.

ESG podcast: Securities Commission #Malaysia outlines plans for green Islamic finance (part 2)

In this podcast Zainal Izlan Zainal Abidin of Securities Commission Malaysia speaks about the country's strategy for socially responsible and sharia-compliant investing. He talks about the challenges in making Malaysia a global Islamic finance centre. He sees great potential for Malaysia as it rolls out new products, such as a sukuk ETF. Zainal believes the gradual harmonizing of Sharia definitions will fuel more cross-border transactions between Malaysia and the Middle East.

Ali Allawala appointed CEO of #Malaysia’s Standard Chartered Bank Islamic unit

Pakistani banker Ali Allawala has been appointed as the chief executive officer of the Islamic Unit of Standard Chartered Bank Malaysia. Ali Allawala possesses over 22 years of experience in retail banking, both within conventional and Islamic banking. He joined Standard Chartered Bank Pakistan in 2012 and had previously worked for Citibank and Samba Financial Group. He was named "Best Islamic Consumer Banker in Pakistan 2015" by the Islamic Finance Awards. Mr. Allawala has extensive multi-product experience in business development, product management, distribution, digital banking and marketing.

Matrix Concepts, #Indonesian consortium to jointly develop Islamic financial district in Jakarta

Malaysian property developer Matrix Concepts is teaming up with an Indonesian consortium to jointly develop an Islamic financial district in Jakarta. Matrix entered into a memorandum of understanding (MoU) with Bangun Kosambi Sukses (BKS) and Nikko Sekuritas Indonesia (NSI) for the joint development dubbed PIK 2 Sedayu Indo City. Matrix said the proposed development was initiated by the Indonesian government in its quest to position itself as an Islamic financial hub. PIK 2 Sedayu Indo City will encompass 1,000ha of land complete with residential houses, apartments, shopping centres, a light rail transit system, and a stadium.

Green #sukuk creates ripples on prominent environmental concerns

According to Securities Commission Malaysia (SC) deputy CEO Datuk Zainal Izlan Zainal Abidin, the world will need up to US$90 trillion (RM360 trillion) worth of investments for infrastructure by 2030. This presents a significant opportunity for green finance and green sukuk to be part of the mainstream investment for the financing solutions. In July 2017, SC, Bank Negara Malaysia and the World Bank Group established the country’s first green sukuk. Green sukuk has become the trend that has received support from investors and regulators on a global scale. NewParadigm Capital Markets Managing Director Charanjeev Singh says more green sukuk issuances are expected to take up the Islamic finance space as Malaysia continues to be the catalyst for Islamic bonds. So far, the focus has been big government-owned companies. The next level of development would be to facilitate the middle- market or the mid-sized companies, and not necessarily the government- owned or government-linked, but the A or AA ratings.

#Malaysia should look beyond ringgit to draw Chinese to #sukuk market

Malaysia is one of the largest markets for Islamic finance. According to Mohieddine Kronfol, chief investment officer at Franklin Templeton Investments, Malaysia's sukuk market could attract Chinese companies if there were more foreign currency-denominated issues. He said Malaysia has attracted foreign companies to issue sukuk, but they were predominantly in ringgit and largely domestically bought.Mohieddine said there should be more transactions in international currencies like the U.S. dollar, and a currency regime or some central bank support that facilitates that. Franklin Templeton Investments projects global sukuk growth at 15-20% this year on the back of stable oil prices, better growth outlook in markets that issue sukuks and sustained demand for Islamic finance.

Islamic Equity Class Should Explore Solutions To Stay Competitive - Sultan Nazrin

According to the Sultan of Perak, Sultan Nazrin Shah, the Islamic equity asset class needs to explore solutions and achieve critical mass volume in order to remain competitive. He delivered his keynote speech at the Franklin Templeton Investments 2018 Islamic Forum in Kuala Lumpur. He believes that Islamic finance must embrace the era of disruptive innovation, with a continued strong focus on product innovation. The global asset management landscape had been pushed to embrace new online investment platforms and failure to keep up with these changing structural dynamics could put the industry at an even greater disadvantage than at present. He said that Islamic investors could also capitalise on the emerging "green" or environmentally-friendly finance.

Exclusive - #Malaysia's Maybank prepares to spin off and list #insurance unit: sources

Malayan Banking (Maybank) is preparing to spin off and list its Etiqa insurance arm on the local stock exchange. Etiqa operates in Malaysia, Singapore, the Philippines and Indonesia and is estimated to be worth at least $1 billion. As part of the transaction, Maybank’s investors are expected to receive shares in the insurance company in proportion to their existing holding in the bank. Etiqa provides life and general insurance as well as family and general takaful. In 2017 Eitqa reported a record revenue of 6.2 billion ringgit ($1.6 billion). Profit before tax rose 18.5% to 1 billion ringgit last year. In March, Etiqa said it maintained its top position in Malaysia’s general insurance and general takaful segment with an 11.8% market share. It was ranked fourth in the life and family segment, with an 8.9% market share.

MBSB starts afresh as a full-fledged Islamic bank

MBSB Bank, the result of a merger between Malaysia Building Society and Asian Finance Bank, starts afresh as a full-fledged Islamic bank. According to group CEO Datuk Seri Ahmad Zaini Othman, the bank intends to differentiate itself in the area of transactional banking, as well as in digital capabilities. One of the key targets in MBSB Bank’s three-year business plan is to have fee-based income account for at least 25% of its total income by the end of 2020. The bank hopes that its approach towards customers will also set it apart from other lenders. MBSB Bank is starting out with total assets of RM43.7 billion, making it the second largest standalone Islamic bank after Bank Islam Malaysia (RM57.7 billion). Personal financing constitutes the biggest portion of the bank's gross financing and is extended mainly to civil servants. MBSB plans to make a stronger push in the industrial hire purchase segment, which involves SME financing. Zaini plans to offer a lot more products and services for SMEs, especially in the area of current accounts.

Allianz still keen to acquire #takaful business

Despite a failed merger with HSBC Amanah Takaful a year ago, Allianz Malaysia is still keen to acquire a takaful business. According to Allianz CEO Zakri Khir, there is bright takaful business growth potential because the penetration rate in Malaysia is just 15%. Allianz Malaysia has recently sealed a partnership with insuretech start-up PolicyStreet to offer potential clients to purchase insurance policies online. Four Allianz digital products will be offered on PolicyStreet’s digital platform namely Enhanced Road Warrior, Smart Home Cover, Allianz Travel Care and Allianz Flight Care. In 2017, Allianz Malaysia's profits fell 7.7% to RM287.96 million from RM312.13 million on the back of 2.6% rise in revenue from RM4.68 billion to RM4.8 billion. Zakri said Allianz Malaysia was impacted by Bank Negara's detariffication of motor and fire insurances from July 1 2017.

Maybank Islamic to grow trade financing biz

Malaysian Islamic banks are boosting their trade financing market share with various measures. Maybank Islamic CEO Mohamed Rafique Merican said the bank intended to grow its trade facilities in line with growing demand for Islamic finance in Malaysia. Mohamed Rafique was speaking to reporters after a forum on "Islamic Trade Finance: Revitalising Trade and Unlocking New Potential". He said a lot more could be done to boost Islamic trade facilities, which stood at 1.5% out of US$50 billion. RHB Islamic Bank CEO Datuk Adissadikin Ali said Islamic banks would need to collaborate with the financial technology players to provide e-commerce trade financing. He added that RHB Islamic Bank was developing an e-commerce trade financing platform to enable companies to boost their working capital and the platform was likely to be implemented next year.

#Malaysia can be Islamic #fintech leader, says Fitch Group unit

According to research agency BMI, Malaysia has the potential to be a world leader in Islamic financial technology (fintech). The research firm said Malaysia’s Islamic banking sector was worth US$202 billion last year, while its Islamic loans also more than doubled to 30.2% the same year, compared to just 7.8% a decade ago. BMI noted Malaysia has a developed infrastructure, an increasingly affluent and tech-savvy population, and high mobile and broadband penetration rates coupled with fast internet speeds. The Memorandum of Understanding between MIMOS and the International Center for Education In Islamic Finance (INCEIF) has laid down the foundation for the development of Islamic fintech in Malaysia.

#Malaysia remains lead in Islamic finance

Malaysia has great potential to broaden its market share and strengthen its leadership in Islamic finance. According to the latest report by the Malaysia International Islamic Financial Centre, Asia’s Islamic financial assets amounted to US$528.7 billion (RM2.05 trillion), or 26% of the world’s Shariah-compliant financial assets as at end-2017. Malaysia continued to be the main driver for both sukuk outstanding and issuance for the year, with a market share of 51% and 36.2% respectively as at end-2017. The country also led in the Islamic wealth management industry with US$28.3 billion (36.5% global share). It also ranked first in terms of number of funds with a total of 394 funds and 27.9% global share, followed by Pakistan with 147 funds and Indonesia with 143. In the banking sector, Malaysia ranked third globally after Iran and Saudi Arabia with a total Islamic banking assets of US$204.4 billion as at end-2017.

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