Asia

Arsalaan is new HSBC Amanah CEO

HSBC Amanah Malaysia has appointed Arsalaan Ahmed as its chief executive officer (CEO). HSBC Amanah announced that Arsalaan will be leading the Islamic banking businesses for retail, commercial and wholesale banking, and reporting to HSBC Bank CEO Mukhtar Hussain. Prior to joining HSBC Amanah, Arsalaan was appointed as the head of capital financing and financial institutions of Barwa Bank in Doha, Qatar, where he led the development of the Islamic debt capital market and wholesale banking platform. Arsalaan has 15 years of experience and has distinguished himself as an expert in syariah-compliant retail, corporate and investment banking.

S&P's Not Yet Ready to Upgrade #Indonesia's #Rating from Junk

S&P Global Ratings may not be ready to upgrade Indonesia’s credit rating from junk, concerned by rising bad debts and risks to the growth outlook. Indonesia failed in June to win an upgrade from S&P, which rates the nation’s debt at BB+ with a positive outlook. S&P said at the time that while the country’s fiscal framework had improved, it still faced challenges on its budget performance. Josua Pardede, an economist at PT Bank Permata in Jakarta, said Indonesia still faces fiscal risks. He estimated the tax shortfall for this year will be more than 200 trillion rupiah ($15 billion), causing the budget deficit to widen to around 2.7% of gross domestic product. The government has a deficit cap of 3% of GDP. The ratings company will meet with Indonesian Finance Minister Sri Mulyani Indrawati within the next few weeks before it makes its next assessment due in December. S&P is the last of the three main credit-rating companies to keep Indonesia on junk status.

#Malaysia eyes #sukuk ties with #Qatar

Malaysian Minister of International Trade and Industry, Mustapa Mohamed underscores the importance of promoting its sukuk market to Qatar. Mohamed suggests to promote Malaysia’s sukuk industry and to invite the Qatar Financial Centre (QFC) and Qatar-based Islamic banks to Malaysia and explore avenues for partnerships. The minister was in Qatar yesterday for a brief visit and met with major Malaysian companies and witnessed the signing of an MoU between Masskar Hypermarket and Infinity Channel. The minister said that there are several Malaysian companies in Qatar that would want to do more business in the fields of construction, services, consultancy, IT, and engineering. Malaysian ambassador Ahmad Jazri Mohamed Johar added that the minister’s visit also aims to enhance bilateral relations between Qatar and Malaysia, whose trade volume stood at around $1bn in 2015.

Local banks' #sukuk value still lagging

#Malaysian banks may have dominated the sukuk market but in value terms the world’s top three sukuk managers, namely HSBC, Standard Chartered and JPMorgan Chase are ahead of any of the local top banks. Second Finance Minister Datuk Johari Abdul Ghani said that despite accounting for 54% of the global sukuk issuances, the country still lags behind global banks. He said local banks could not compete on this front because Malaysia lacks the presence of an Islamic mega bank. Malaysia had in the last 12 months issued 25 of the 30 largest sukuk issuances which collectively totalled US$37 billion (RM154 billion) in value. Thirteen of these sukuk offerings were domestic offerings. Johari urged the 57 member states of the Organisation of Islamic Cooperation (OIC) to consolidate their capabilities to produce higher global gross domestic product (GDP).

Sabana Shariah Compliant REIT’s Latest Earnings: Challenging Conditions Ahead

Sabana Shariah Compliant REIT released its fiscal third-quarter earnings yesterday. The REIT’s portfolio currently consists of 21 industrial properties in Singapore. Gross revenue was S$23.0 million in the reporting quarter, down 9.7% compared to the previous year. Net property income declined 24% to S$13.9 million during the same period, mainly due to higher operating expenses. As a result, the REIT’s distribution per unit for the quarter also tumbled by 32.2% to 1.20 cents based on a unit count of 739.8 million units. At the end of the reporting quarter, the REIT had a net asset value per unit of S$0.81, down 23.6% from the S$1.06 seen a year ago. According to manager Kevin Xayaraj, industrial rents are expected to be under pressure with the onset of the softening demand and high supply of industrial space in the market. Market conditions are exptected to remain challenging.

Maybank Islamic, CIMB Islamic partake in IILM’s US$1.11bil #sukuk

The International Islamic Liquidity Management Corporation (IILM) has conducted an auction of US$1.11bil (RM4.63bil) three-month tenor sukuk priced at 1.35389% profit rate. The IILM said the 11 primary dealers that participated in the Sukuk offering were Abu Dhabi Islamic Bank, Al Baraka Turk, Barwa Bank, Boubyan Bank, CIMB Islamic Bank, Kuwait Finance House, Maybank Islamic, National Bank of Abu Dhabi, Qatar Islamic Bank, Qatar National Bank and Standard Chartered Bank. The IILM Sukuk is rated A-1 by Standard & Poor's Rating Services and the 29th series brings the total cumulative amount of the IILM Sukuk that were issued and reissued to US$21.14bil (RM88.14bil).

Windfall for startups? #Saudi Arabia backs new $100 billion tech #fund

Saudi Arabia is joining forces with Japanese telecom firm Softbank (SFTBF) to form a tech investment fund worth as much as $100 billion, making it one of the largest on the planet. Softbank CEO Masayoshi Son said that over the next decade the fund would be the biggest investor in the technology sector. Saudi Arabia's sovereign wealth fund will put up as much as $45 billion of the money, with Softbank throwing in at least $25 billion. Neither partner appears to be deterred by warnings of potential bubbles in the valuations of big startups and established tech companies in the US. Funding for startups has also plunged recently in India. Earlier this year, Saudi Arabia announced an ambitious plan to create a huge sovereign wealth fund that would be worth 7 trillion riyals ($1.9 trillion) by 2030, which would make it by far the biggest in the world.

Regulating #Indonesia’s Buzzing #Fintech Space

The Indonesian Financial Services Authority (OJK) notes that there are currently 71 active fintech startups in the country. These startups provide diverse products and services, including payment gateways, lending, banking services, insurance services, pawn shops, or online financial advisory. This has also led the OJK to pay more attention to the sector, with hopes of developing appropriate regulation. The regulations that will be issued by OJK should not be too rigid, so as to provide a balanced climate. Some regulatory concerns include business licensing, business operation, governance, supervision and inspection, reporting obligations, and equities. All in all, the seriousness of OJK and other relevant parties to provide supportive regulations will hopefully bring strategic action.

Maybank Islamic, CIMB Islamic partake in IILM’s US$1.11bil #sukuk

The International Islamic Liquidity Management Corporation (IILM) has conducted an auction of US$1.11bil (RM4.63bil) three-month tenor sukuk priced at 1.35389% profit rate. The IILM said the 11 primary dealers that participated in the Sukuk offering were Abu Dhabi Islamic Bank, Al Baraka Turk, Barwa Bank, Boubyan Bank, CIMB Islamic Bank, Kuwait Finance House, Maybank Islamic, National Bank of Abu Dhabi, Qatar Islamic Bank, Qatar National Bank and Standard Chartered Bank. The IILM Sukuk is rated A-1 by Standard & Poor's Rating Services and the 29th series brings the total cumulative amount of the IILM Sukuk that were issued and reissued to US$21.14bil (RM88.14bil).

Source: 

http://www.thestar.com.my/business/business-news/2016/10/12/maybank-islamic-and-cimb-islamic-partake-in-iilms-us$1pt11bil-sukuk/

SMI to create sharia unit to attract Middle Eastern investors

#Indonesia's state-owned infrastructure financing company Sarana Multi Infrastruktur (SMI) will establish a sharia business unit to meet demand for Islamic infrastructure financing. SMI president Emma Sri Martini said the documentation and legal matters had been completed, but the company had to wait for the appointment of a sharia supervisory board by the government. SMI will inject Rp 500 billion (US$38.42 million) into the business unit. All of the money will come from internal funds. Currently, SMI's assets total Rp 35 trillion. Before year-end, the business unit will structure some sharia products from direct placement to sukuk.

OJK Seeks Islamic Financial Products Growth

In #Indonesia the Financial Service Authority (OJK) is seeking to boost Islamic financial products growth through better access to the financial service industry. According to OJK Commissioner Council member Firdaus Djaelani, better access to financial products will ease service delivery, lead to the affordable price, as well as to other benefits. The market share of Islamic finance in Indonesia is still low at 5.3%. However, Firdaus is optimistic that Islamic finance industry has a huge potential. He believes that people need to participate in enhancing market share of Islamic finance industry, including through engagement in the Islamic Economic Society (MES). The better understanding of Islamic financial products will open up access to financial institutions. Better access for the people and SMEs will also provide a sense of security in financial investment.

APM to establish #sukuk programmes

In #Malaysia APM Automotive Holdings has proposed to establish an Islamic commercial papers (ICP) programme and Islamic medium term notes (IMTN), with a combined nominal value of up to RM1.5 billion. In a bourse filing APM said the ICP and IMTN programmes will have a tenure of seven years and 20 years respectively, from the date of first issue. The proceeds from the issuance of the sukuk murabahah shall be utilised by the company for general corporate purposes and to refinance future financing of APM and its subsidiaries. APM assured that the utilisation of the proceeds of the sukuk murabahah programmes would be at all times for syariah-compliant purposes.

NB: Figure was amended from RM 3 bn to RM 1.5 bn following correction in original source.

MICROFINANCE EVENT: Executive #Forum: Financial Inclusion and Islamic Finance, November 11-16, 2016, Kuala Lumpur, #Malaysia

The Financial Inclusion and Islamic Finance Forum is scheduled to take place in Kuala Lumpur between the 11th and 16th of November. The event is hosted by the IFSB, a Malaysia-based standard-setting organization that issues guiding principles for banking, capital markets and the insurance sectors. The other host is the International Centre for Education in Islamic Finance, a university also based in Malaysia and centered around the Islamic finance industry. The standard fees to attend are USD 1,200 if registering by November 2, 2016, and USD 1,500 if registering after.

2 firms become Shariah compliant

In the #Philippines Golden Haven Memorial Park and Cemex Philippines are now among the Shariah-compliant securities listed locally. Golden Haven and Cemex were among the 56 listed securities that made it to the Shariah list. Chief Operating Officer of the Philippine Stock Exchange (PSE), Roel A. Refran, said the PSE continues to provide a list of Shariah-compliant securities to cater to the needs of Islamic investors. He noted that by highlighting listed firms that adhere to the standards of Shariah law, PSE hopes to open investment opportunities in the country to Islamic funds.

This REIT Has An 11% Dividend Yield: Here’s What Investors Should Know About It

Sabana Shariah Compliant REIT is the world’s first real estate investment trust that has adopted the standard of Shari’ah compliance. Sabana REIT currently has a portfolio of 21 industrial buildings that are all found in Singapore. Most of the properties are also located in close proximity to the principal industrial zones in the island, such as Penjuru and Tai Seng. For perspective, the SPDR STI ETF, an exchange-traded fund that mimics the fundamentals of the Straits Times Index, has a yield of 3.2%. In its latest quarterly earnings report Sabana REIT reported a 10.9% year-on-year decline in gross revenue and a 31.1% decline in income available for distribution.

Singapore Based EthisCrowd Recognized as Best Islamic #Crowdfunding Platform

EthisCrowd has been recognized as the Best Islamic Crowdfunding Platform for its social impact real estate campaigns in Indonesia. The Singapore-based platform received the award at the 6th Global Islamic Finance Awards (GIFA) 2016 in Jakarta. EthisCrowd said the inclusion of the crowdfunding category symbolized the growth and adoption of Islamic Crowdfunding. The platform’s community now claims 17,000 registered members who have invested in projects to build 5,000 houses for the needy in Indonesia. Ronald Yusuf Wijaya, EthisCrowd’s head of Indonesian operations, stated that affordable housing projects are commercially viable and can provide excellent returns for the crowd. EthisCrowd uses Mudarabah contracts to formalize rights to profit or revenue sharing for investors, directly with real estate developers and contractors. There is no capital guarantee or fixed interest rates for investors.

Financial inclusion: Collaborative efforts to address poverty

Underprivileged citizens today live in an economy that exposes them to certain risks, like unpredictable incomes and high daily expenses. With around 70% of the population still excluded, Indonesia has taken major leaps to improve the situation. Since the preceding high-level talks in 2010, Bank Indonesia (BI) and the Financial Services Authority (OJK) have focused on how to provide better access to financial services. The disproportional knowledge between the banking industry and the population in general is quite severe, and a product to address the specific needs of the economically active poor and micro entrepreneurs is essential. Moreover, the challenges of financial inclusion do not stop when formal financial services are provided. It goes beyond service provision to educating and empowering the community to understand finance. Financial inclusion cannot be achieved through isolated efforts. Collaboration between private companies, the government and civil society is necessary.

Islamic Finance as a Tool of Chinese Financial Diplomacy

With only roughly 20 million Muslims in #China, it is not surprising that Islamic finance has not taken off in China. However, some Chinese companies have expressed interest in tapping into offshore pools of Islamic funds. For example, HNA Group, the owner of Hainan airlines, is considering Islamic financing options for its proposed US$ 150 million acquisition of ships as well as a large offering of offshore Sukuk. Another example is that of Country Garden, which issued a Malaysian Ringgit 1.5 billion sukuk through its Malaysian subsidiary in December 2015. Chinese interest in Islamic finance can be motivated by the diversification of funding sources as much as financial diplomacy purposes. China’s growing geo-political clout via the Asian Infrastructure Investment Bank (AIIB) and the 'One Belt, One Road' initiative affords new incentives to facilitate the use of Islamic finance.

Why commodity-linked #sukuks should be introduced

A sukuk is a sharia-based hybrid instrument that can have the features of both a conventional debt instrument and of equity. Sharia requires all financial contracts to be rooted in real sector activities. Sukuk has coupons paid at prefixed times in the future. However, the quantum of the coupon is not prefixed, but depends on the performance of the sukuk-issuing enterprise. This ensures that the sukuk holders partake in the risk of the enterprise. A sukuk can be issued for any commodity. The commodity-linked sukuk would not only be a win-win instrument for both investors and issuers, it would also be beneficial to society.

Crowdfunding Islamic Banks

As some areas of banking face competition from peer-to-peer lenders, #Malaysia’s Islamic Financial Services Act 2013 included provisions that can build some of the same types of disruptive innovation into the Islamic banking marketplace. One of the most important was the launch of the Investment Account Platform (IAP) in February 2016 which is a crowdfunding platform owned by Malaysian Islamic banks. The IAP serves as a way to measure customer interest in crowdfunding as an alternative to traditional bank deposits. The investment account growth in Malaysia demonstrates an opportunity for IAP and other innovative FinTech platforms. Islamic banks should realize that they have within their guiding principles a call to embrace risk sharing rather than risk shifting.

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