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Tuesday, 2 July 2013

Growth potential for Islamic fund management

Islamic wealth management has great potential to be the next big thing but requires innovation to allow for its expansion, according to a banker from CIMB Bank Investment Bhd.

Shahril Simon, who heads group asset management at the bank’s CIMB Islamic division, said one of the key policy recommendations in Malaysia stated the support for the growth of Islamic funds and wealth management industry.

“Islamic wealth management is the next big thing and is part of the innovative solutions in Islamic finance and part of Islamic money management.

“Over the next decade, the Islamic capital market is expected to sustain double-digit growth,” he said at a panel discussion at the Labuan IFC Wealth Management Forum 2013.

Fund management or assets under management is valued at RM505.1 billion in Malaysia, while net asset value of the unit trust industry stood at RM294.9 billion in 2012.

Islamic assets under management (AUM) accounted for about 16% of the industry’s total assets under management or RM79.6 billion.

There are 18 Islamic fund management companies operating in Malaysia including Aberdeen Islamic Asset Management Sdn Bhd, AmIslamic Fund Management Sdn Bhd, RHB Islamic Asset Management Sdn Bhd, BNP Paribas Islamic Asset Management Sdn Bhd and KFH Asset Management Sdn Bhd.

Shahril noted there are hurdles that have to be removed to ensure the expansion of the segment in Malaysia, where Muslims are increasingly seeking Shariah compliant products.

He said it was critical to build domestic take-up capabilities for innovative domestic products and solutions to pursue the development of the Islamic fund management industry.

Shahril said Islamic wealth management is based on the Islamic principle of religion, life, intellectual progeny and property, which showed that Islam called for the efficient management of wealth from its beginning.

The Islamic capital market, at RM1.4 trillion, has enjoyed greater internationalisation through wider participation of foreign sukuk issuers from Singapore, the United Arab Emirates, Bahrain and Kazakhstan, he noted.

Given the fact that over 88% of Bursa Malaysia stocks are Shariah-compliant, which includes blue chips from various sectors. there are no limited supply of investment avenues that could benefit the investors in the Islamic wealth management arena.

Trends in Malaysian wealth favour a more prominent role for Shariah-compliant asset management while CIMB aims to expand AUM by 43% over a three year period, according to a Datamonitor Research paper dated 2012.

(The Malaysian Reserve / 01 July 2013)

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Noor Islamic Bank executes $1.4b mandates in Turkey

Dubai: Noor Islamic Bank has completed Islamic capital market mandates valued at over $1.4 billion (Dh5.14 billion) in the past six months in Turkey, cementing its position as the leading GCC bank executing Shari’a compliant syndicated facilities in Turkey.
In its latest foray into the Turkish market, as an initial mandated lead arranger and joint bookrunner, Noor successfully closed a $500 million equivalent dual-currency Murabaha facility for Türkiye Finans Katilim Bankasi. Launched at $250 million, the syndicated loan was oversubscribed two times.
The facility, which saw the participation of 28 banks from across the globe, was structured as a Shari’a compliant dual currency, dual tranche facility with tenors of one year and two years.
Over the past six months, Noor Islamic Bank has also been an initial mandated lead arranger and joint bookrunner for a $382 million dual currency Murabaha Facility for Asya Katilim Bankasi (Bank Asya) and a $500 million Sukuk for Tukiye Finans Katilim Bankasi A.S.

In total, 85 banks and financial institutions across Asia, Middle East, Africa and Europe have participated in the syndicated financing deals led by Noor this year.

(Gulf News.Com / 30 June 2013)

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MSM Sharia Index to attract more investment in Islamic finance

By Kabeer Yousuf — MUSCAT — Muscat Securities Market launched ‘Sharia Index’ (MSMSI) aiming at measuring the stock’s performance of Sharia-Compliant Companies that pass the AAOIFI for compliance with the Islamic investment principles yesterday. With this launch, more individuals and corporates are expected to make use of the Islamic financial offerings in the country as a better investor sentiment and trust is created with the introduction of the Sharia Index.

AAOIFI (Accounting and Audit Organisation for Islamic Financial Institutions), the Sharia Board is an organisation in Bahrain which comprises Islamic Scholars that issue the religious guidelines to the Islamic financial institutions in the region. “I am certain that there is quite a significant number of people and bodies in our society who are keen to invest in Sharia-compliant financial products and I’m equally certain that the launch would further augment Islamic investment portfolio in the country”, Ahmed bin Saleh al Marhoon, Director-General, MSM said.

Speaking to the Observer, Al Marhoon further noted that “This is the introduction of the Islamic financial institutions and this is the time we have been working on issuing an index which is compliant with the Sharia requirements”. For the introduction of the Sharia Index, MSM has contracted with ‘IdealRatings’ to examine and analyse all the listed companies in order to make sure that those listed companies are in compliant with Sharia requirement. Also, the application of Sharia principle No 21 that is related to securities is also verified. MSMSI is a free-float Index capped at 10 per cent and the index constituents will be revised each quarter.

Marhoon further said that there has been a highly encouraging trend regarding the new IPO’s and an number of companies from both private and public sectors are on the anvil to launch their public offers. “More companies based on Sharia and power generation besides some major public sector companies are expected to launch their IPO’s this year”, Marhoon added.

(Oman Daily Observer / 02 July 2013)

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