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Thursday July 29, 2010

HwangDBS: Islamic investments not sufficiently represented globally

KUALA LUMPUR: To capture the huge untapped market for syariah-compliant investments locally and abroad, there is a need to attract and develop talent, develop in-depth understanding of the target market and innovate and customise Islamic products to meet customer requirements, said HwangDBS Investment Management Bhd international equities head Peter Chiang.

“Syariah-compliant investments are currently not sufficiently represented globally and hence the general lack of confidence in the performance of such investments,” he said at a media briefing entitled Syariah-complaint Investments – An Investment For All yesterday.

Chiang said that 88% of the total listed securities on Bursa Malaysia were syariah-compliant, making up 64% of the total market capitalisation. “On average, one in three funds launched locally is syariah-compliant and many of the equity-type funds have been charting double-digit growth rates, where 60% of the investors are non-Muslims,” he said.

He said syariah-compliant investments had proven to deliver investment returns equal and often above conventional investments.

“Yet the number of investors (in syariah-compliant investments) remain small, compared with conventional investments, leading us to believe that education and access to knowledge may be the key stumbling blocks to greater investor participation,” he said.

Mohamed Izaham Abdul Rani (left) and Peter Chiang at the media briefing yesterday

According to HwangDBS findings, the Islamic finance market currently commanded about 20% of the total banking sector, 70% to 80% of the primary debt capital market, over 60% of the total outstanding corporate bonds, and 10% of the asset management industry.

Asian Islamic Investment Management Sdn Bhd (Aiiman) chief operating officer Mohamed Izaham Abdul Rani said syariah-compliant investments had greater transparency and presented possibly lower risk compared with conventional investments. Aiiman is the Islamic investment arm of HwangDBS.

“Syariah-compliant funds are guided by stricter investment guidelines compared to conventional funds,” he said.

Mohamed Izaham said syariah-compliant investments were growing in prominance among non-Muslims.

“There are now some Islamic funds with as much as 50% invested by non-Muslims,” he said. He said Aiiman currently had about RM1.2bil assets under management, parked mainly in unit trust funds and discretionary mandates.

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