Malaysia

Azimut and Maybank to jointly manage #sukuk fund, seek new markets

Italian money manager Azimut Holding will jointly manage its Islamic bonds fund with Maybank Asset Management Group to cater to growing demand for hard currency sukuk products. The partnership will allow the fund to penetrate new markets including Malaysia and Singapore, where Maybank Asset Management already operates. Azimut launched its global sukuk fund in 2013 which has over $130 million in assets. Maybank Asset Management launched a U.S. dollar-denominated sukuk fund of its own in 2014. Sukuk funds remain tiny compared to their conventional fixed-income counterparts, but the sukuk market has widened in recent years thanks to an increasing number of issuers and investors.

Allianz gets nod to start talks to buy HSBC Amanah #Takaful

Allianz Malaysia has received the green light to begin stalks to acquire HSBC Amanah Takaful (Malaysia). According to Allianz, Bank Negara Malaysia (BNM) has no objection in principle for Allianz to commence negotiations with HSBC Insurance (Asia Pacific) Holdings, JAB Capital and the Employees Provident Fund Board on the proposed acquisition. This is subject to all parties concluding the negotiations within six months from BNM's written approval. Pursuant to the Islamic Financial Services Act 2013, parties concerned are required to obtain the prior written approval from BNM or the Minister of Finance on the recommendation of BNM, before entering into any agreement to effect the proposed acquisition.

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.

#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).

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).

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/

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.

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.

RAM Ratings reaffirms Litrak’s RM1.45b #Sukuk

RAM Ratings has reaffirmed the AA2/Stable ratings of Lingkaran Trans Kota’s (Litrak) Sukuk Musharakah IMTN I and II Programmes (2008/2023) with a combined value of up to RM1.45bil. The ratings reflect Lebuhraya Damansara-Puchong’s (LDP) robust traffic profile, underscored by its strategic alignment through major townships, which supports its strong debt-servicing capability. According to RAM Ratings, Litrak will preserve its strong cashflow-generating ability, with an average projected annual pre-financing cashflow of about RM215mil throughout the Sukuk’s tenure. This translates into solid debt coverage, enabling the company to maintain a strong finance service coverage ratio of at least two times over the same period.

Kuwait Finance House strengthens its #Malaysia operations and supports local Halal industry

Kuwait Finance House-Malaysia (KFH-Malaysia) is taking steps towards expanding its operations in Sarawak on top of the two existing branches at present. CEO David Power reinstated KFH's commitment to grow and expand after paying a courtesy call on Chief Minister Datuk Patinggi Tan Sri Adenan Satem. He added that there were 15 branches throughout Malaysia since its establishment in 2006, two of them in Sarawak. He noted they were evaluating the performance of the two existing branches first and consider to set up another branch. KFH Malaysia is looking forward to stronger business ties in the state in the long term to provide Islamic financial services and products to the people of Sarawak.

#Malaysia’s leadership in Islamic finance a catalyst for ESG-driven investment

RAM Ratings sees Malaysia’s leadership in Islamic finance as a catalyst for environmental, social and governance (ESG)-driven investment. RAM Ratings CEO Foo Su Yin said for ESG growth the government needs to follow a similar path to that which has led to Malaysia’s leadership position in Islamic finance. PRI managing director Fiona Reynolds said that fiduciary duty remains the biggest barrier to ESG integration. She added that investors and policymakers need to work together to ensure sustainability issues continue to gain traction. There are compelling national-interest reasons for policy makers to promote the incorporation of ESG factors into investment practices in China, Hong Kong, India, Malaysia, Singapore and South Korea.

#Malaysia’s transport binge to spur #sukuk sales

Malaysian corporate sukuk sales are rebounding from a four-year low. RHB Investment Bank sees issuance rising 7% to RM60.2bil in 2016, encouraged by Bank Negara’s monetary easing in July. AmInvestment Bank forecasts as much as RM70bil. Sukuk sales have picked up after Najib kicked off US$16bil of road and subway projects this year in partnership with the private sector. This month the Public Sector Home Financing Board sold RM3.4bil of Government-guaranteed Islamic notes, while Lebuhraya Duke Fasa 3 Sdn. offered RM3.64bil of syariah debt to finance a highway in Kuala Lumpur. Fundraising is needed for construction of 1,800km of roads being built in Sabah and Sarawak. Other potential issuers include Prasarana Malaysia, which is financing a RM10bil extension of Kuala Lumpur’s light-rail network.

Gulf sukuk issuance forecast to remain stagnant for months

Corporate and infrastructure sukuk issuance in the Gulf region and Malaysia has continued to stagnate so far this year and this may carry over to the coming quarters, according to S&P Global Ratings. Despite the slump, essential infrastructure funding requirements, low interest rates, and investors' appetite for Islamic assets in their portfolios continue to be supportive for the world's core corporate sukuk markets.

In the GCC, corporate and infrastructure sukuk issuance totalled $2.5 billion in the first eight months of 2016, compared with $2.3 billion for the preceding eight months. Versus the same periods in 2013 and 2014, issues are down sharply from $5 and $6.5 billion, respectively, S&P said.
"Further out, we see possible brighter prospects for issuing corporate and infrastructure sukuk over the medium to long term. We estimate that Gulf government spending on projects alone - including infrastructure contracts awarded over 2016-2019 - could be about $330 billion," said S&P Global Ratings analyst Karim Nassif.

Moody's: Islamic banks' strong liquidity profiles driven by retail strengths and government sukuk availability

Moody's Investors Service says that the liquidity coverage ratios of Islamic banks in key Asian and GCC countries highlight sound liquidity profiles and broad compliance with Basel III regulatory requirements.
"In the report, we highlight that a key driver of LCR performance is the funding profile of banks and, in this context, over-reliance on corporate deposits and unsecured wholesale funding means higher potential liquidity pressures," says Simon Chen, a Moody's Vice President and Senior Analyst. "However, banks with a greater proportion of retail deposits that are considered more 'sticky', typically display stronger LCRs," adds Chen.

Malaysia Plans Indonesia Shariah Stock Trading Link by 2017

Malaysia’s stock exchange operator is discussing a tie-up with Indonesia’s bourse and plans further alliances to mobilize funds targeting the world’s almost $12 trillion in Shariah-compliant equities.

Bursa Malaysia Bhd. is in talks with the Indonesia Stock Exchange to explore various forms of cooperation such as allowing cross listings and hopes to start collaborating by mid-2017, Jamaluddin Nor Mohamad, Bursa’s Islamic capital market director said in an interview in Kuala Lumpur. Bursa plans to forge partnerships with exchanges in Asia and the Middle East to develop the Islamic capital market, he said.
Malaysia already tightened compliance rules for Shariah stocks in 2013 as it sought to draw overseas funds who have a stricter view on permitted investments. Shariah law forbids investments in shares of companies involved in activities considered unethical such as gambling, prostitution, alcohol and pork-related businesses.
Some 669 stocks, or 74 % of the total shares listed on Bursa Malaysia, comply with Shariah principles, according to the Securities Commission. The market regulator reviews the list twice a year based on the companies’ audited financial statements.

Bank Islam unfazed by developer loans proposal

Bank Islam Malaysia Bhd said the proposed move to allow developers to provide loans to house buyers will not have a severe impact on the bank, as it will continue to focus on its target market.
“For us, we don’t see any reduction in (our) approval rate, mainly because our target market remained stable,” its deputy CEO Khairul Kamarudin told reporters after launching the bank’s Visa Infinite Business Credit Card-i (business card-i) here yesterday. “Our target market has always been the middle income (segment) and we will continue focusing on our target market and we are seeing the same approval rate (going forward)”. Khairul said the bank’s approval rate last year was 70%, and slightly better this year at 71%, to date. He also said the bank has not experienced high loan rejections despite the current uncertain economic conditions. “People (borrower) who are eligible last year are also eligible this year. For the ones who have their applications get rejected are maybe for the ‘high ticket’ properties,” he added, noting that the bank is more focused on providing loans for affordable housing.

Opinion: Halal and Tayyib – the next wave

If we look back at the emergence of the Muslim Lifestyle markets as a global phenomenon, we can see an interesting pattern developing. From 2004 - 2007, Malaysia was the epicenter of the Halal movement, bringing the terms ‘Halal market’ and ‘Halal industry’ into the global business vocabulary. Bidding to become a global Halal hub, the development of their Halal food sector made Malaysia a role model for other countries looking to position themselves in this fast-growing marketplace. Abdalhamid David Evans, Founder, HalalFocus.net/ImaratConsultants.com, will be speaking about this topic at the Muslim Lifestyle Expo 2016 in Event City, Manchester on the 30 October 2016.

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