Malaysia

RM100b corporate bonds, #sukuk issuances to be expected

The Securities Commission Malaysia (SC) is expecting up to RM100 billion worth of corporate bonds and sukuk issuance this year. The regulator said the Covid-19 outbreak and the resultant disruption on businesses have affected fundraising activities. Thus any non-payment of profit arising from the current challenging operating landscape is very likely due to credit rather than Shariah issues and would therefore be dealt with from a credit perspective. SC deputy CEO Datuk Zainal Izlan Zainal Abidin said that Malaysia continues to maintain its leadership in the Islamic capital markets (ICMs). The SC noted that ICM represented 63.57% of Malaysia’s capital market, with market size of RM2.04 trillion as of December 2019, an 8.23% growth over 2018. The SC added that the Islamic fund management industry also witnessed new and innovative investment product offerings. These include Islamic exchange-traded funds based on gold, SRI Islamic funds, as well as social and green sukuk.

#Malaysia’s BIMB Investment launches Shariah-ESG robo-advisor

BIMB Investment launched a robo-intelligence investing platform focused on sustainable and Shariah-ESG assets. BEST Invest will give investors access to a suite of BIMB Investment’s Shariah-ESG unit trust funds across asset classes including global equities, Asia Pacific equities, sukuk, and money market. BIMB Investment became an official signatory of the United Nations-supported Principles for Responsible Investment (UNPRI) in July last year. At the time, the company’s CEO said it had integrated more than 250 ESG metrics in its investment process since 2015. The new robo-advisor will allow users to either start investing for themselves or enable the system to identify and select the best investment methods. Investments start at 10 ringgit with a zero sales charge.

Islamic investments a more stable choice in uncertain times

According to Malaysian Principal Islamic Asset Management CEO Datuk Syed Mashafuddin Syed Badarudin, Islamic investments are less volatile than their conventional counterparts and may be a better choice for investors during times of uncertainty. He notes that the increased uncertainty from the coronavirus outbreak has led to financial market volatility not seen since the last global financial crisis. Asean countries, including Malaysia, have already cut policy rates in response to the turmoil. Based on real interest rates in the region, there is more room for rate cuts and this bodes well for bond prices. Badarudin expects that market conditions will continue to be volatile until some stability is seen regarding the virus situation. He expects Principal Islamic to increase its asset size this year despite the more challenging economy.

Maybank Islamic’s new Dubai branch sets out to attract Gulf investors to Southeast Asia

Maybank Islamic’s move into branch banking in the Middle East aims to attract Gulf investors to Southeast Asia. The Malaysian bank opened its first overseas branch at Dubai International Financial Centre (DIFC) in February. Maybank Islamic deputy CEO Nor Shahrizan Sulaiman said the new Dubai branch would serve as a the bank’s gateway not just to the UAE but to the wider GCC. The bank pursues further growth in Singapore and Indonesia, which it sees as home markets outside of Malaysia. The international business expansion is not new, as it has always been one of the focus areas of Maybank Islamic from early on. Maybank Islamic was granted a full Islamic banking licence from the Dubai Financial Services Authority last July, allowing it to open the DIFC branch. It replaces Maybank Islamic’s office in Bahrain, which has closed down.

Etiqa gives RM1mil to buy ventilators

Etiqa is contributing RM1mil for the purchase of ventilators through Mercy Malaysia’s Pandemic Fund to support strategic preparedness and response plan to the Covid-19 virus. This initiative will also help ensure all communities are well prepared, especially those with the weakest health systems. With the number of people infected with Covid-19 increasing in Malaysia, the number of ventilators available at designated hospitals will be insufficient to deal with the number of critical cases. Etiqa Insurance & Takaful Group CEO Kamaludin Ahmad feels obligated to help the country battle Covid-19 and hopes that this contribution will mean that no patient will have to be denied lifesaving care due to ventilator shortage.

Covid-19 fund amassed RM8.1m in donations

THE Covid-19 fund, launched by Malaysian Prime Minister Tan Sri Muhyiddin Yassin on March 11, received a RM5 million contribution yesterday. The donations came from Spanco Sdn (RM2 million), followed by DRB-Hicom, MMC Corp and YTL Corp who contributed RM1 million each. Property developer Titijaya Land has contributed 520,000 face masks for frontliners. With the above donations, the fund has amassed a total of RM8.13 million in contributions. The government has launched the Covid-19 fund to help affected Malaysians. Similarly, the Malaysian Department of Islamic Development has also launched another fund to help the Muslim communities affected by the outbreak. Separately, some Malaysians are criticising the setting up of funds and are calling on ministers to take pay cuts instead.

#Sukuk issuance stalls on subdued economy

Sukuk issuance could potentially take a hit this year, dragged by subdued economic growth. In 2018, when Malaysia’s GDP growth slowed to 4.7%, sukuk issuances fell by 2.6%. In 2019, when real GDP growth moderated further to 4.3%, sukuk issuances slipped by 2.3%. However, the current low interest-rate environment will prevent sukuk issuances from falling too significantly this year. According to Malaysia Rating Corp (MARC) chief economist Nor Zahidi Alias, the downside risk remains especially if the Covid-19 outbreak continues to be unmanageable and lockdown periods across global economies continue. Policymakers globally are using fiscal and monetary tools to soften the impact of the Covid-19 outbreak. The US Federal Reserve’s move to lower its benchmark to a near-zero rate prompted central banks across many sukuk active markets to cut their interest rates.

Shariah gold ETF rises as safe havens in demand

Malaysian Affin Hwang Investment Bank expects gold prices to average higher in 2020, helped by sustained accommodative monetary policies among major central banks. Using the TradePlus Shariah Gold Tracker exchange-traded fund (ETF) as an avenue to invest in the precious metal, Affin Hwang believes the ETF’s fair value is RM2.30. In 2019, the price of gold surged by 18.9% year-on-year (YoY) to US$1,523.1/oz compared to a decline of 2.1% in 2018 to US$1,309.3/oz. In the near term, Affin Hwang Capital believes concerns over the recent Covid-19 outbreak will likely continue to drive safe-haven flows into gold. Due to geopolitical concerns and low-interest rates, the World Gold Council noted that holdings in gold-backed ETFs hit an all-time high of 2,885.5 tonnes in 4Q19 compared to 2,858.8 tonnes in 3Q19 mainly from North American and European-listed funds.

Digital platform to drive takaful demand

Malaysia has firmly established itself as an Islamic hub in the world through leadership and innovative product offerings. As such, the creation of an Islamic finance-enabling ecosystem is the key driver of the Malaysian takaful industry’s growth. The takaful sector continues to enjoy faster growth than the conventional insurance sector. Family and general takaful premiums rose by 29.6% and 16.4% respectively in the first half of 2019 (1H19), compared to 12.2% in conventional life and -1.3% in general insurance. However, surverys show that almost half of the Malaysian population does not have protection due to a lack of awareness. According to Fitch Ratings, takaful operators should rethink the way these products are positioned to entice a larger crowd looking for general protection through the use of digital applications.

Indonesian Islamic P2P lender Ammana Fintek Syariah eyes international expansion starting with #Malaysia

Indonesian Islamic peer-to-peer lender Ammana Fintek Syariah is keen on entering international markets and is starting its expansion with neighbouring Malaysia. Ammana is also eyeing Brunei and Dubai as part of its international expansion. The Shariah-compliant fintech is in the process of applying to become a member of the international Islamic finance standards body the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). Ammana Fintek Syariah was established in July 2017 and disbursed 17.6 billion rupiah ($1.29 million) in financing in 2019.

Qatar- Malaysia builds framework for digital Islamic banks

Malaysia's central bank Bank Negara Malaysia is pushing the financial sector to join the digital banking revolution. It is preparing the issuance of the country's first five digital banking licences. Digital banks also named virtual banks, neobanks or challenger banks predominantly deliver banking services through digital channels such as Internet portals and smartphone apps with minimal, if any, brick-and-mortar presence. Among the largest standalone digital banks globally are currently N26 from Germany, Monzo, Starling and Revolut from the UK, Chime from the US, Tangerine from Canada, Nubank from Brazil, Neat from Hong Kong and WeBank from China. In the Islamic financial industry examples are insha, a co-operation of Turkey's Albaraka Turk Participation Bank with German solarisBank, and some others such as Boubyan Bank. Adding to this, Qatar Islamic Bank as part of its digital transformation has developed a fully digital financing services arm. Malaysia could potentially join with digital Islamic banking services in case Maybank and CIMB receive digital banking licences.

CIMB Islamic contributes RM1 million for conservation efforts of Setiu Wetlands

CIMB Islamic Bank has committed RM1 million per year, renewable annually for up to 3 years for the conservation efforts of Setiu Wetlands, Terengganu. The three-year project with a total potential commitment of RM3 million, is in collaboration with World Wide Fund for Nature Malaysia (WWF-Malaysia). The project contributes towards safeguarding Setiu Wetlands’ healthy and functioning ecosystem by establishing a critical knowledge base to guide sustainable development. This is CIMB’s third collaboration with WWF-Malaysia on strategic conservation projects, subsequent to the project in Ulu Muda, Kedah, and in Ba’ Kelalan and Long Semadoh in Sarawak.

Evolving Islamic fintech

In this interview Stalla Cox CBE, the Managing Director of DDCAP speaks about her company and the evolving Islamic fintech scene. DDCAP Group was established over twenty years ago and has always selected its global expansion strategically. DDCAP opened in the Dubai International Financial Centre (DIFC) in 2008. Following the turn of 2000, there was significant repatriation of Shari'ah compliant capital to the Middle East. At a similar point in time, DDCAP was also invited by Bank Negara Malaysia to join a steering group that was formed in response to the Malaysian financial authorities granting permissions to Islamic banks from the GCC to do business locally. Consequently, a regional office was opened in Kuala Lumpur, Malaysia. The global financial services industry is moving at an incredible pace. With ETHOS AFP, DDCAP managed to create an enabling platform with global reach and provides a fully integrated treasury trading workflow for Shari’ah-compliant transactions.

Alliance Islamic Bank Launches Halal in One Programme

Alliance Islamic Bank launched its Halal in One Programme, a halal enterprise ecosystem that aims to help small-and-medium enterprises (SMEs). The programme offers business owners solutions like business advisory, business matching services, and shariah-compliant financing. Alliance Islamic signed a memorandum of understanding with its strategic partner HQC Commerce Sdn Bhd (HCSB) in conjunction with the launch of Halal in One Programme. Alliance Islamic CEO Rizal IL-Ehzan Fadil Azim said SMEs in Malaysia have the advantage to tap into the global halal segment, where 90% of SMEs are not certified. He said Alliance Islamic's Halal in One Programme offers business advisory to help SMEs obtain halal certification from the Department of Islamic Development Malaysia.

Islamic banks ready to support SMEs

According to the Association of Islamic Banking and Financial Institutions Malaysia (AIBIM), local SMEs are not fully utilising various solutions provided by Islamic banks despite credit availability. AIBIM has 26 members comprising of 11 domestic banks, 5 development financial institutions and 10 locally incorporated foreign banks. A recent survey of its members shows that about 10,000 SMEs received more than RM10 billion in funding. AIBIM stated several Islamic financial institutions provide supply chain financing, also known as supplier finance. Supply chain financing is a set of solutions that improves cashflow by allowing businesses to lengthen their payment terms to their suppliers while providing the option for their large and SME suppliers to get paid early.

Is return to gold standard imminent?

The Kuala Lumpur Summit 2019 called for a common cryptocurrency to be implemented among Muslim nations to avoid dependence on the US dollar. Prime Minister Tun Dr Mahathir Mohamad also called for the use of gold among Muslim nations particularly for trade settlement. The return to some form of gold standard globally is going to be among the greatest events that will take place in this century. The Movement for Monetary Justice Malaysia (MMJ) believes the best form of money for the modern world is gold-based cryptocurrency with a netting arrangement. Gold would bring about a fixed exchange-rate regime and eliminate speculation, manipulation and arbitrage in the foreign-exchange market and thereby would bring back stability and sustainability.

Malaysia Plans Digital Banking License Launch

Malaysia becomes the latest to capitalize on the rising trend of digital banking with plans to issue up to five licenses.

Islamic banks ready to support SMEs

The local Malayesean small and medium enterprises (SMEs) are not fully utilising various solutions provided by Islamic banks despite credit availability. The Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) took a survey in Kuala Lumpur and Selangor and about 10,000 SMEs received RM10 billion in funding.

Experts say the odds are against gold dinar

Prime Minister Dr Mahathir Mohamad brought an idea of a gold dinar as an international reserve currency for Muslim countries in preference to the US dollar as the dollar was sometimes unstable. Nazari Ismail, a professor of economics at Universiti Malaya thinks, that the idea is not reliable, as countries as Saudi Arabia, Qatar, Pakistan and Indonesia would be not interested in the prime ministers proposal.

Islamic finance body IILM names new CEO

The International Islamic Liquidity Management Corporation (IILM) has announced on monday that Dr. Umar Aimhanosi Oseni is their new CEO. (IILM) is an international consortium that issues short-term Shariah-compliant financial instruments to facilitate cross-border liquidity management for institutions that offer Islamic financial services.

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