RHB Islamic International Asset Management (IIAM) has launched the RHB Islamic Asian Megatrend Fund, leveraging on the growth potential of Asian markets. According to RHB Group Asset Management managing director Eliza Ong the total assets under the fund stand at RM127 million. The fund is looking at a return of between eight and 12 per cent per annum over the next three to five years.
Daud Vicary Abdullah, President of the International Centre for Islamic Finance discusses the role of education and specifically higher education programs in Islamic finance. Islamic finance has been growing to where it is today because it has used conventional tactics or conventional instruments. Now there is a big opportunity to use new risk-sharing instruments. The idea is that people get education early and see this not as a religious threat but as a set of options about which they can make realistic choices.
The 13th Islamic Financial Stability Forum (IFSF) was successfully organised by the Islamic Financial Services Board (IFSB) on 12 April 2016 and was held in Cairo, Egypt on 10-12 April 2016, hosted by the Central Bank of Egypt. The theme of Forum was Consumer Protection in Islamic Finance, and the main presentation was by Professor Volker Nienhaus, the Former President of Marburg University. He stated that while most of the issues in consumer protection cover both conventional and Islamic segments of the financial system, there are some risks pertinent to Islamic finance sector, such as Shariah non-compliance risk.
According to Fitch Ratings the total new Sukuk issuance (with a maturity of more than 18 months) in the Gulf Cooperation Council, Malaysia, Indonesia, Turkey, Singapore and Pakistan was around US$11.1 billion (RM42.9 billion) in the first quarter of 2016. Fitch said that Sukuk issuance was up 22% from Q4’15 and 21% from a year earlier, while non-Sukuk bond issuance of US$17.1 billion was down 23% quarter-on-quarter and 45% year-on-year. Sukuk represented 39.3% of total bond and Sukuk issuance in these countries during the quarter – the highest proportion in the past eight years.
The Malaysian government, via special purpose entity Malaysia Sukuk Global Bhd, has successfully priced the 10-year and 30-year benchmark sukuk papers at 3.18 and 4.08 per cent. The new sukuk format uses non-physical assets to underpin the agency-based transaction wakala, instead of the traditional use of physical assets. Finance Ministry secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah said Malaysia has strengthened its position as a top investment destination.
According to a deal lead Malaysia has launched a US$1.5bn dual-tranche sukuk. The transaction is split between a US$1bn 10-year tranche that has a profit rate of 135bp over Treasuries and a US$500m 30-year tranche at 145bp over Treasuries. Guidance of 150bp area over Treasuries and 165bp area over was released earlier on Wednesday. The transaction is conducted by CIMB, HSBC, JP Morgan and Maybank.
The Federation of Malaysia returned to the international bond markets on Wednesday with a $1.5 billion wakala sukuk. However, this success is overshadowed by 1MDB's $11 billion debt after one of its guarantors failed to make a $50 million interest payment on a $1.75 billion note that matures in 2022. It has now entered a grace period, which ends on April 25.
CEO Shahril Ridza Ridzuan announced that the Employees Provident Fund aims to open the Shariah-compliant plan in January 2017 and is targeting an initial size of as much as 100 billion ringgit ($26 billion). There’s strong demand and 1.5 million of its 6.7 million members should switch in the first year. EPF has a minimum guaranteed annual payout of 2.5 percent. The Islamic fund won’t have a minimum dividend as they can’t be guaranteed under Koranic rules.
Syarikat Takaful Malaysia Bhd (STM)’s first financial quarter ended March 31, 2016 (1QFY16) net profit was in line with their expectations, accounting for 24% of the full-year forecast. The positive takeaway from the 1QFY16 results was a swift expansion of 14.4% year-on-year (y-o-y) in gross earned contributions (GEC) to RM426.8 million. This emanated primarily from its family takaful unit, which chalked up a growth of 21.8% y-o-y in its 1QFY16 GEC (mainly from mortgage-related products).
Malaysia may price its 10- and 30-year global Islamic bonds at 150 and 165 basis points over U.S. Treasuries. The data compiled by Bloomberg show that Malaysia’s existing sukuk maturing in 2025 yield 3.05 percent, while securities due in 2045 are paying 3.96 percent. According to Abu Dhabi’s sovereign wealth fund International Petroleum Investment 1MDB and Malaysia’s finance ministry are in credit-default, but the state firm’s President Arul Kanda said the company is in dispute with IPIC and he sees an amicable resolution.
1MDB issued a statement Monday saying Abu Dhabi state-run fund International Petroleum Investment Corp. has failed to pay interest on $1.7 billion on the Malaysian fund's 2022 bonds. The Malaysian government was cautioned about risks associated with the debt-ridden fund in 2014. The state investment fund set up by Prime Minister Najib Razak, has been burdened with debt of over $12 million over the years and has been accused of mismanagement while facing corruption allegations. Apart from Malaysia, the 1MDB investigation is also underway in the United States, Luxembourg, Singapore, Switzerland, Hong Kong and Abu Dhabi.
Chairman of CIMB Group Holdings, Datuk Seri Nazir Razak, is taking leave of absence to facilitate the review of the bank’s anti-money laundering processes. Earlier this month, Nazir was identified as one of the persons whom his brother, Datuk Seri Najib Tun Razak, had assigned the task of disbursing US$7mil (RM27.2mil) in the run-up to the 2013 general election. The review is expected to be complete in a few weeks, by which time the board of directors will decide whether Nazir will maintain his positions in the group.
Strong views were recently expressed by the Muslim Consumers Association of Malaysia that the Islamic banking and finance industry follows the letter but not the spirit of Islam. Islamic finance (IF) is developing at a remarkable pace. However, Islamic banking is now being accused of operating in a similar fashion as its conventional counterpart, and being skewed to more profit and business-driven interests than serving the real needs of a just society. The heart of Islamic finance involves a risk-sharing spirit, which does not prevail in the practices of contemporary Islamic banks. The importance of independent Syariah supervision will significantly influence the development of the Islamic capital market.
Al Rajhi Bank Malaysia (ARBM), a wholly owned subsidiary of Saudi Arabia's Al Rajhi Bank, has received approval from Bank Negara Malaysia for the appointment of Steve Chen Thien Yin as its new Chief Executive Officer (CEO). As CEO, Steve Chen is responsible for the overall operations of ARBM’s business. He brings along with him more than 25 years of professional experience in Retail, Corporate and Investment banking in growth markets of Malaysia, Singapore, Vietnam, Cambodia and Laos. Prior to joining ARBM, he was the Chief Operating Officer (COO) for Corporate and Structured Finance at Malaysia’s Hong Leong Bank Berhad.
Western media should apologise for misleading the Malaysian public after a US$681 million deposit was found to be a “genuine donation”, Mr Najib’s press secretary said on Friday, April 15. Saudi Foreign Minister Adel Al-Jubier had earlier confirmed that the millions found in PM Najib’s bank account was a donation originating from Saudi Arabia. In a statement, Tengku Sariffuddin accused former Prime Minister Mahathir Mohamad of carrying out a smear campaign against Mr Najib which is being motivated by "personal interest". Najib has been facing allegations of graft after reports claimed that the funds found in his personal bank account originated from troubled state fund 1Malaysia Development Berhad (1MDB).
The Securities Commission Malaysia’s (SC) Capital Market Masterplan 2 (CMP2) identifies the promotion of socially responsible financing and investment as a key thrust. It enables financial innovation to be harnessed to create market-based solutions and mobilises investments for projects that promote sustainable and inclusive development such as alternative energy sources or clean technology. Among the products identified in CMP2 are green bonds, green funds as well asl longer-term opportunities for trading of environmental products such as carbon credits or weather derivatives. These products have led to many potential areas in green financing.
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Bank Muamalat Malaysia Bhd sees a listing of the bank as an alternative for its shareholders, but is of the view that the market is not conducive for such an exercise currently. Bank Muamalat is 70% owned by DRB-Hicom Bhd and the rest is held by Khazanah Nasional Bhd. A potential listing of Bank Muamalat could be an option if DRB-Hicom fails to find a suitable suitor to acquire a stake in the bank. DRB-Hicom is required to pare down its stake in Bank Mualamat to 40% but this has been delayed for a few years because it was unable to agree on the terms with potential buyers.
Bank Muamalat Malaysia Bhd targets to sell about 320kg of Muamalat Gold-i (MGi) valued at about RM56mil for the financial year ending March 31, 2017 (FY17). Chief operating officer (Business), Mashitah Osman, said MGi was the bank’s latest initiative to boost its wealth management segment. Physical gold bars are available in five, 10, 20, 50 and 100gm. Without any publicity, the bank has sold over 80kg worth RM14mil since it was opened to the public two-and-a half months ago, Osman said. Meanwhile, vice-president/head wealth management departmen, Nur Ain Ramli, said the bank expected the gold business to contribute about 60% of the total fee income for the wealth management segment for FY17.
While 1Malaysia Development Bhd (1MDB) is seeing a positive balance sheet with total assets exceeding total debts by RM3 billion, it cannot be denied that revaluation of its land assets, which were acquired relatively cheaply, is what saved it from slipping into a deficit. As at last January, 1MDB had RM53 billion in assets compared with RM50 billion in debts. While details of 1MDB's latest assets and debts are not available, past records do show that its cheap buys in the land division with the federal government especially have worked to help bolster its balance sheet by at least RM6.36 billion.
Malaysia plans to sell as much as US$1.5 billion of global Islamic bonds, less than a month after Indonesia's sukuk attracted bids of more than three times the offered amount. The marketing of the notes started on Monday and they will likely have maturities of 10 and 30 years. The proceeds will be used to refinance US$1.2 billion of Shariah-compliant debt coming due in July. Malaysia's sale coincides with a rebound in the ringgit, which has rallied more than 10 per cent this year. A pick up in Brent crude is also brightening the outlook for the oil exporter's finances, just as sentiment is improving after an indebted state investment company sold off assets.