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Monday, 5 October 2015

Islamic finance & management events in Kuala Lumpur Malaysia

Date: 29-30 September 2015
Event: KL International Conference on Shariah & Legal Aspects of Islamic Finance 2015
Event site:

Date: 12-13 October 2015
Event: KL International Conference on Islamic Wealth Management & Financial Planning
Event site:

Date: 27-28 October 2015
Event: KL International Conference on Islamic Finance
Event site:

To register or reserve a seat online, please go to:

Organizer: Alfalah Consulting

EIB starts Islamic Banking index

Dubai: Emirates Islamic Bank said on Monday it has launched an Islamic Banking index, aimed at understanding the benchmark shift in the market penetration, as well as the perception, knowledge and intent of UAE consumers towards Islamic Banking.
“By analysing four key indicators [penetration, perception, knowledge, and intention], we have created for the first time a benchmark that brings together perception and reality on the status of the Islamic Banking industry in the UAE,” said chief executive officer Jamal Bin Ghalaita.
“In doing so, the index reveals more than just the attitudes and opinions of people in the UAE towards Islamic Banking — it also creates a pathway to the solutions that will enable us to drive the continued growth of Islamic Banking in the UAE,” Bin Ghalaita added.
The survey was done with a sample size of about 900 clients from the different emirates, and the main criteria was that the principal has a banking product.
“This index would help the economy in bringing more transparency and also in getting views of Muslims or non-Muslims and if they have used the products. The idea is how are we able to improve the communication with our clients in making them understand the products and services that we offer,” Bin Ghalaita said.
Banking for all
“Islamic banking is open for all, our doors are open for all. The idea is very transparent banking. If we overcharge, either it goes to charity or or it goes back to the client. So these values of banking, we need to communicate in a better manner to attract more customers,” Bin Ghalaita said.
About 50 per cent of the respondents have had heard or used an Islamic Banking product, indicating the depth of awareness.
“While many people have heard about the structures, not many people are aware about the specifics of how the structure works,” said Wael Ebrahim, chief operating officer at Emirates Islamic Bank.
Almost half of the UAE banked respondents have at least one Islamic product. While Muslim consumers have a fairly even number of conventional and Islamic products.
The survey also found out that the respondents perceive that Islamic banks support the community more and have lower transaction fees as compared to conventional banking. Overall, Islamic banks are more trusted particularly by users of Islamic banking products, the survey revealed.
About a quarter of the respondents expressed their intention to acquire an Islamic and conventional banking product in the coming six months, three-fourths said they they were open to Islamic Banking products, 21 per cent said they only look for Islamic Banking products, while 54 per cent said they kept both options open.
(Gulf News Economy  05 October 2015)
Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Islamic finance to hit $3t amid headwinds

Assets held by Shariah-compliant financial institutions worldwide will expand to approximately $3trillion from the current $2trillion in the next few years, despite moderate growth and stronger headwinds Islamic finance industry faces in 2016.  
Standard & Poor's Ratings Services said 2016 would be a crossroads for Islamic finance with headwinds, including the possible negative impact of much lower oil prices and the prevailing low interest rates in most major developed countries, slowing the industry growth.
"Offsetting these negatives are factors such as advancements in standardisation for Islamic finance products that could attract new players, the potential lessons for the industry from bank resolution regimes in conventional finance, and the benefits from implementation of Solvency II for many insurance companies in 2016," S&P analysts said on Sunday ahead a conference it is hosting in Dubai to discuss "Prospects for Islamic finance."
The Islamic finance industry's current and expected trends, and the increasing role of regulation and the way it shapes and supports market development will be a particular focus of the 4th Annual Islamic Finance Conference opening today, it said.
"In our view, after 20 years of solid growth, the industry has achieved a critical mass that enables it to face increasing headwinds. Still, the reality of declining oil revenues could start to take a toll on governments' budgets and economic growth in core markets for Islamic finance. Our 2015 conference will discuss the perspectives on recent market development and regulatory frameworks," said Stuart Anderson, Managing Director & Regional head, Middle East, Standard & Poor's.  
Anderson pointed out that the industry's move toward product standardisation has accelerated over the past couple of years, with increasingly similar products and sukuk structures being used across different countries.
Higher standardisation could help in attracting new players, while leaving space for innovation. The moves in conventional finance toward the implementation of bank resolution regimes and the bail-in of certain categories of liabilities could spill over into Islamic banking. For example, Islamic banks have so far not strictly applied profit and loss sharing, which is embedded in the principles of Islamic finance, he said.
"We think that, with the rollout of bank resolution regimes in conventional finance, applying this principle more strictly in Islamic finance could be smoother," said Anderson. Global sukuk issuance volumes have dropped by about 40 per cent since the beginning of 2015. "The fall stems mainly from the Central Bank of Malaysia's decision to switch out of sukuk to other liquidity management instruments for Malaysian Islamic banks. In other countries, however, Islamic finance has continued to attract significant interest, and its ethical nature is seducing some clients beyond its natural reach", said Mohamed Damak, global head of Islamic Finance for S&P.
S&P analysts felt that the advance of Islamic finance into non-Muslim countries has stalled over the past year, mainly due to regulatory hurdles and the generally low interest rate environment that makes other funding sources more attractive.
"We anticipate that assets held by Islamic financial institutions worldwide - currently totalling about $2 trillion by our estimates - will expand to approximately $3.0 trillion in the next few years. We expect the pace of Islamic finance growth will moderate in 2016, compared with advances over the past couple of years, chiefly because of the now less supportive economic environment in the industry's two major growth engines, Malaysia and the GCC."
In the UAE, Shariah-compliant assets have crossed the $100 billion milestone for the first time. Islamic banking penetration in the UAE currently stands at 21.4 per cent and represents a 14.6 per cent share of the global market. The industry in the UAE is growing at more than twice the rate of conventional banking, according to EY's report based on a study. The Islamic banking sector in the Emirates is on track to achieve $263 billion of Shariah-compliant assets by 2019.
The projected size of the Islamic banking sector in the UAE is expected to account for almost 15 per cent of the world's six core Islamic markets estimated to hit $1.8 trillion by 2019. Global Islamic banking assets witnessed a compound annual growth rate of around 17 per cent from 2009 to 2013.

(Khleej Times / 05 October 2015)
Alfalah Consulting - Kuala Lumpur:
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Sunday, 4 October 2015

Malaysia sukuk drought seen easing this quarter

KUALA LUMPUR: Malaysian companies building railways and power plants under Prime Minister Najib Razak’s US$444bil development programme will help revive sukuk sales from the slowest quarter since 2010, said AmInvestment Bank Bhd.

Corporate issuance could rise to as much as RM60bil (US$13.5bil) for the full year, said Mohd Effendi Abdullah, head of Islamic markets at Kuala Lumpur-based AmInvestment Bank, after sales slumped to RM7.2bil in the third quarter. While the forecast would mark a pick-up from the RM31.5bil sold so far this year, offerings would still remain below levels for the past three.

More syariah-compliant bond sales are likely to be announced once the United States goes ahead with an expected interest- rate increase, removing an uncertainty that’s stifled issuance, said Mohd Effendi. Jimah Power East Sdn Bhd, a unit of the state electricity company, plans to sell RM10bil in October in what will be Malaysia’s third biggest sukuk sale of all time. DanaInfra Nasional Bhd, which is financing a new subway system in Kuala Lumpur, is due to announce a RM40bil programme in the fourth quarter, according to people familiar with the matter.

“The sukuk pipeline looks better now,” said Mohd Effendi at Malaysia’s third-biggest Islamic bond arranger of 2014. “If demand is healthy, this could encourage moreissuers to tap the market.”

Islamic bond sales in the world’s biggest market for the debt dropped 56% in the third quarter from the previous three months, according to data compiled by Bloomberg.
Issuance in the first nine months of 2015 declined 37% from a year earlier. Offerings totalled RM65.1bil last year.

“It’s a challenging time for arrangers and issuers,” said Mohamed Azahari Kamil, Kuala Lumpur-based chief executive officer of Asian Finance Bank Bhd, the Malaysian unit of Qatar Islamic Bank SAQ. “So long as the ongoing uncertainty in the local and global markets persists, sukuk sales are unlikely to pick up substantially.”

The United States refrained from increasing interest rates in September, keeping markets in limbo as to when it will tighten monetary policy. Fed officials have indicated they may make a move at either one of this year’s two remaining meetings, in October and December.

Prospects of higher US interest rates have drained capital from emerging markets and pushed up borrowing costs for bond issuers. In Malaysia, yields on top-rated, 10-yearconventional corporate notes climbed 25 basis points to a four- year high of 4.87% in the third quarter, a central bank index shows.

That was the biggest three-month increase since March 2014.

AmInvestment’s Mohd Effendi said sukuk issuers that need the funds will still go ahead with sales even if market conditions are tough because they can structure longer-maturity debt to appeal to pension funds and insurers.

Prime Minister Najib is farming out infrastructure projects to the private sector as well as government-linked companies. He is seeking to transform Malaysia into a developed economy by 2020 and announced last October that the nation will start work on projects valued at RM75bil this year.

“We expect large infrastructure and utility issuance in the fourth quarter, but sales are anticipated to be 25% lower than 2014,” said Angus Salim Amran, Kuala Lumpur-based head of financial markets at RHB Investment Bank Bhd, a unit of Malaysia’s fourth biggest sukuk arranger last year.

(The Star Online / 02 October 2015)

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Islamic Investment Malaysia:

China turns to Islamic finance to expand economic clout

Islamic finance is gaining prominence as a channel for China to expand its economic influence abroad as banks strengthen ties with Muslim-majority countries and Chinese companies start to tap offshore pools of Islamic funds.
With a Muslim population of about 20 million, China has little reason to develop Islamic banking at home. But there are powerful reasons for it to get involved in the sector overseas.
China wants to build stronger trade ties with Asian countries under its "One Belt, One Road" strategy to rebuild Silk Road trade links with Asia and Europe.
The network will include the world's main centers of Islamic finance, the Middle East and Southeast Asia, where sharia-compliant assets account for as much as a quarter of total banking assets.
"With 'One Belt, One Road', (Chinese) state-owned enterprises and private companies are now more willing to explore Islamic finance," said Hong Kong-based Ben Ping Chung Cheung, Asia Pacific head of consultancy Shariah Advisory Group.
The firm is advising conglomerate HNA Group [HNAIRC.UL] on what could be the first Islamic financing by a mainland firm: a $150 million deal to buy ships. HNA also plans an offshore issue of sukuk (Islamic bonds), Cheung said.
A railway project in the eastern province of Shandong is also exploring issuing sukuk to raise as much as 30 billion yuan ($4.7 billion) for a high-speed rail link, said Cheung.
If successful, such a deal would rank among the largest sukuk ever issued. Hurdles remain, however, as discussions were still preliminary and any financing would face stiff competition from domestic banks, Cheung added.
In July, Singapore-based adviser Silk Routes Financials said it had been mandated by a unit of state-owned Sichuan Development Holding Co to advise on Islamic financing options.
"There is certainly some momentum, a consequence of the large and growing trade links between China and the Gulf," said Jonathan Fried, a partner at law firm Linklaters in Dubai.
Such plans are ambitious as Chinese firms face a steep learning curve in Islamic finance, which obeys rules such as a ban on paying interest and uses formats that can be morecomplex than conventional finance.
For their part, Islamic investors have plenty of money to buy into dollar-denominated sukuk, but historically have tended to invest in top-rated issuers.
"The attraction would be if sukuk is cheaper for issuers, and clearly there are a lot of companies in China within the right industries, the right structures for it," said Kalai Pillay, head of North Asia industrials at Fitch Ratings.
At a governmental level, Chinese participation in Islamic finance may be mainly via the Asian Infrastructure Investment Bank (AIIB), a new multilateral lender backed by Beijing.
The AIIB has discussed using Islamic finance with the Saudi Arabia-based IslamicDevelopment Bank (IDB), two lenders which have 20 member countries in common.
Islamic deals could help AIIB differentiate itself from rivals such as the World Bank and Asian Development Bank.
China's state-owned banks are already raising their profile in the Gulf. In the past year, Agricultural Bank of China, Bank of China and Industrial and Commercial Bank of China (ICBC) have issued conventional bonds listed on NASDAQ Dubai.

"The next stage will be sukuk issuance by Chinese entities, facilitated and co-managed by these banks," said Fried at Linklaters.
(Reuters / 22 September 2015)
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