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Friday December 16, 2011

Foreign sukuk issuance in Malaysia likely to rise by 30%

KUALA LUMPUR: Foreign issuance of sukuk in Malaysia is expected to increase by 25%-30% next year from 10%-15% currently owing to the global economic calamities and eurozone sovereign debt crisis.

Amanie Advisors Sdn Bhd director Baiza Bain said the sukuk issue would be US dollar and ringgit denominated issues mainly from the Gulf Cooperation Council (GCC) and Europe.

“The eurozone debt crisis has crippled the euro bond issuance and as a result, more companies seeking funding are looking for alternative financing in the form of sukuk in GCC and Malaysia. Unlike the GCC, Malaysia is the largest sukuk issuer in the world and has a good secondary market infrastructure to facilitate trading of this asset class. Apart from this, the country has ample liquidity to support the issuance of sukuk,” he said at a press briefing on the Misconceptions in Islamic Investments.

Malaysia was currently the world leader in sukuk issuance, commanding about 63% or US$179bil of the global sukuk market. Baiza said he expected Malaysia's market share of global issuance to further increase to between 65% and 67% by next year given the high demand for sukuk.

In the first half of the year, a total of 19 sukuk issues were approved amounting to RM32bil, of which RM24.6bil had been issued, according to the Securities Commission.

He said Malaysia's latest US$2bil gobal wakala sukuk had been well received, with 29% taken up by Gulf investors, 27% by Malaysian investors, 14% by European investors, 22% from Asia and 8% from US.

Meanwhile, Asian Islamic Investment Management Sdn Bhd CEO and executive director Akmal Hassan said he expected the Islamic investment and fund management sector for next year not to be so rosy amid the current challenging global economic environment.

However, he was optimistic the Government's pump priming activities would cushion impact from the tough external environment and this would augur well for the local economy and Islamic investment.

Akmal said syariah-compliant products were for everyone and were competitive in terms of performance, innovation and diversity and not discriminatory against who can subscribe and invest in them.

He added that these products served as alternatives to its conventional counterparts by offering a competitive alternative way of conducting financial transactions to meet the needs of different investors.

Amanie Advisors is the syariah advisor of Asian Islamic Investment Management, which in turn is the external syariah fund manager of HwangDBS Investment Management Bhd.

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