IslamicFinance.de

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 could see more Islamic capital market funds raised this year as sukuk activity has picked up in the first quarter of 2019. According to Securities Commission Malaysia (SC) deputy CEO Datuk Zainal Izlan Zainal Abidin, sukuk issuances are picking up over last year’s level. The government recently announced the revival of the East Coast Rail Link and the Bandar Malaysia projects, brightening investor sentiment which has been dampened lately. According to SC data, Malaysia’s Islamic capital market was valued at RM1.88 trillion or 61% of the nation’s overall capital market as at end-2018, down from RM1.9 trillion the year prior. Malaysia is the world’s largest sukuk issuer, having accounted for 51.6% of global outstanding sukuk as at endJune 2018.

According to Securities Commission Malaysia (SC) deputy CEO Datuk Zainal Izlan Zainal Abidin, the world will need up to US$90 trillion (RM360 trillion) worth of investments for infrastructure by 2030. This presents a significant opportunity for green finance and green sukuk to be part of the mainstream investment for the financing solutions. In July 2017, SC, Bank Negara Malaysia and the World Bank Group established the country’s first green sukuk. Green sukuk has become the trend that has received support from investors and regulators on a global scale. NewParadigm Capital Markets Managing Director Charanjeev Singh says more green sukuk issuances are expected to take up the Islamic finance space as Malaysia continues to be the catalyst for Islamic bonds. So far, the focus has been big government-owned companies. The next level of development would be to facilitate the middle- market or the mid-sized companies, and not necessarily the government- owned or government-linked, but the A or AA ratings.