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Monday, 19 March 2012

Unified Islamic stock index to make stock market attractive for Muslim investors

BAKU (Azerbaijan), 24 Rabi al-Thani/17 March (IINA)-The unified stock index of the Organization of Islamic Cooperation (OIC) will facilitate the development of the financial sector. It will allow the Muslim companies to more actively operate on stock trading. As it is known, the constraints imposed by Sharia law, in fact, excluded many companies from the Muslim countries from the financial business sector.
OIC member-countries intensified the operations to create a single stock index. The Department for OIC affairs under the Turkish Development Ministry, which is one of the most active participants in this process, indicated that the work on the establishment of an Islamic stock index has been conducted for five years. There is growing interest in this process among many Islamic countries.
The index on the common direction and speed of the stock price of companies adhering to the Sharia in their activity is main objective of the new stock index. The index will be used to evaluate the group of stock and subsequent evaluation of global processes in the securities market of Muslim countries.
It should be stressed that there are local equity indices, especially for Muslims at stock exchanges around the world. A certain number of companies whose activities do not run counter to Sharia are used for their calculation. The exchanges did this to attract Muslim investors in the stock market.
Roughly 11 countries are participants of the project to create a unified Islamic exchange index within OIC. A decision about the participation of Saudi Arabia, Malaysia and Indonesia is expected to be made soon. Strengthening of the cooperation between stock exchanges of the OIC member countries will be the main goal of this project.
The project creators said despite the fact that only companies working on the basis of Islamic law will be involved in the index, investors from all over the world can invest in the index.
Therefore, this new index will serve both domestic and international investors wishing to invest transparently and in accordance with Sharia. In the medium term prospect, it will promote the wide spread of Islamic banking worldwide and assist issuers in creating the structured investment products, in accordance with the requirements of the global Islamic market.

(InternatonalIslamicNewAgency / 19 March 2012) 

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Malaysia: Khazanah sells RM1.09b convertible sukuk

MALAYSIA (March 16, 2012): Khazanah Nasional Bhd said yesterday it sold US$357.8 million (RM1.09 billion) worth of exchangeable sukuk at negative yield, a first for this type of asset class.
It is also the first convertible debt paper to be issued in two years.
The seven-year Islamic paper comes with a year-three put option and zero periodic payment. It was priced to pay a yield of negative 0.25% with a 30% conversion premium – both at the issuer-friendly end of marketed terms.
The benchmark sukuk can be exchanged for shares of Parkson Retail Group Ltd, one of the largest department store operators in China in which Khazanah has a substantial stake.
A convertible debt paper provides investors exposure to undervalued stock, but with downside protection.
The negative yield means investors were willing to pay to participate in this deal, which reflected their confidence in Khazanah's credit standing. It also indicated their positive outlook on Parkson Retail's growth prospects.
Khazanah said the sukuk was successfully priced through an accelerated book-building process on March 14.
"The transaction drew a demand of 3.4 times book size, attracting a diverse group of over 100 investors comprising long-only funds, hedge funds, arbitrage funds as well as asset managers across Asia and Europe,'' it said in a statement yesterday.
The sukuk issue also reopened the Malaysian equity-linked market, as being the first Malaysian equity-linked transaction to be launched since early 2010.
"It is yet another milestone for Islamic finance and supports Malaysia International Islamic Financial Centre's initiative to promote Malaysia as a major hub for international Islamic finance,'' Khazanah said.
CIMB Investment Bank Bhd, Deutsche Bank and J.P. Morgan are the joint bookrunners and joint lead managers for the transaction.
"We are very pleased that this issuance has been executed at a very competitive price, setting a benchmark for sukuk issuance while the orderbook in excess of three times the issue size, underlines the market's strong confidence in Khazanah's credit," Khazanah managing director Tan Sri Azman Mokhtar said.
Parkson Retail is listed on the Stock Exchange of Hong Kong. The stock was last traded at HK$9.33 yesterday, or about 16 times its projected earnings.

(TheSunDaily / 14 March 2012)

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