KUALA LUMPUR: Global audit and advisory firm Deloitte Touche Tohmatsu said the market for Islamic securities in Malaysia still has room for growth due to interest from Gulf Cooperation Council (GCC) countries as well as a supportive framework for Islamic financial products.
Deloitte partner Ng Meng Kwai said there was still a lot of liquidity in the GCC countries and interest in investing in syariah-compliant securities, especially those with underlying assets backed by plantations or property leases.
“Islamic securities may even mitigate the impact of the subprime crisis on the Asia Pacific credit markets although at this point the fallout from the crisis has been minimal in the region,” he told reporters at a luncheon briefing yesterday.
Ng said Malaysia's position as the largest issuer of sukuk (Islamic bond) would make it the primary market for more securitisation of certain asset classes that were syariah-compliant. Malaysia has to date issued two-thirds of the US$80bil worth of sukuk worldwide.
Meanwhile, Deloitte managing director for Asia Pacific Securitisation David Pulido said funds were still available for loans although operating in the backdrop of the subprime crisis there might be some caution even in the region.
“It defers from jurisdiction to jurisdiction and is sector-specific, it depends on who's borrowing as well. If you're a well-known name and an easy customer to underwrite then it’s not a problem,” he said.
Pulido said the securities market in the region was still at a stage where only the more basic products were being offered.
“The region's governments only started to enact legislation to support the market between the late 1990s and 2003. So in most countries there's nothing like the complex securities that are offered in the US,” he said.
He said the securities market in Malaysia was very basic, with no fancy structures such as the structured investment vehicles that had been the cause of so much trouble in the US.
He said there had been a significant drop in securitisation from last year. “There's still a lot of interest in certain papers that have not been affected by the subprime crisis,” he said.
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