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Friday, 6 September 2013

Turkey’s giant projects to fuel Islamic finance boom

Turkey’s large infrastructure investments may boost the country’s Islamic finance sector which has already been witnessing a boom, the country’s top capital markets officials have said.

“Islamic finance tools may be benefited from in [financing of] in Turkey’s mega projects like bridges, airports, and Kanal Istanbul. These projects are compatible with the Islamic financing structure,” İbrahim Turhan, chairman of Turkey’s stock exchange Borsa Istanbul said yesterday, speaking at the Islamic Finance News Roadshow.

Vahdettin Ertaş, Capital Markets Board (SPK) chairman, also said that they “believed” the private sector’s sukuk, an Islamic compliant bond, export needs would increase due to the large infrastructure investments on the agenda.

Currently, the Treasury’s sukuk exports have outpaced $5 billion, while the private sector has exported more than $1.5 billion.

During the ceremony, Bank Asya said it was planning to export at least 125 million Turkish Liras of additional sukuk before the year ended, while Albaraka Türk said it was mulling exporting over $200 million worth of sukuk within the last quarter or at the beginning of next year. 

In the past 10 years, the non-interest finance sector grew around 15 percent and the number of countries in which financial bodies operating in compliance with Islamic finance rules could be found has surpassed 70, Ertaş stressed. “It’s expected to exceed $1.9 trillion by the end of this year,” he said.

Islamic finance has been sublimated as a safe haven during the financial crisis that sparked skepticism towards interest-oriented finance.

Alternative financing

According to the chief regulator, these Islamic-compliant tools were “not only valuable because they are religious or virtuous,” but they were also “alternative products leaning on a strong financial basis.” 

Non-interest financial tools are accorded a great importance in Turkey’s bid to make Istanbul a global financial center as well. “We see that there is a substantial saving surplus in our neighboring Gulf country friends, and in Asia, and these funds prefer non-interest financial tolls, in which they can invest safely,” Ertaş said. 

BIST Chairman Turhan also announced that they are planning to open a research and development center for the Islamic financing studies, with the support of the Treasury and World Bank. 

In February the government expanded the utilization of Islamic financial tools. It introduced new regulations opening the way for Islamic banks to found non-interest pension funds and most recently enabling them to invest private pension funds in non-interest financial instruments. 

“As of today the investors of these kinds of [non-interest] funds have surpassed 400,000, while the fund amount reached above $175 million,” Ertaş has said during the same event.

(Daily News / 04 Sept 2013)

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Strong Malaysian capital market seen, SC says Malaysia has good fund-raising track record

KUALA LUMPUR: The local capital market is expected to be “reasonably strong” based on the pipeline of capital raising, Securities Commission (SC) chairman Datuk Ranjit Ajit Singh said.
“We are not targeting any specific number but we have said (based on projections) that the capital raising figures for the local (market) are reasonable. However, it would depend on how the market condition would pan out for the rest of the year,” he told reporters after delivering a public lecture on Islamic Wealth Management co-organised by BNP Paribas Malaysia Bhd and the International Centre for Education in Islamic Finance.
He said Malaysia had a fairly successful fund-raising track record for the last few years. Notably, RM146bil was raised from the Malaysian market last year, of which RM124bil was through the bonds market and RM22bil through the equities market.
Ranjit also said the regulator was targetting to position the country as an Islamic wealth management centre, following Malaysia’s success in other areas of Islamic financial services such as Islamic banking, sukuk and takaful.
“Malaysia has a large pool of savings worth some RM1 trillion. The challenge we have is to ensure that some of these pools of savings are intermediated through the capital markets, so that you create scales in terms of those intermediaries to address Malaysians’ needs, and then to position yourself outside,” he said.
One of the strategies was for foreign asset management units to enter the country, he said, adding that the regulator had issued 19 licences to Islamic fund management firms to-date.
He pointed out that such companies got to enjoy tax incentives.
According to Ranjit, of the US$25 trillion (RM82 trillion) worth of mutual funds in the world, the demand for Islamic funds was only US$60bil to US$70bil (RM197bil to RM230bil), which showed that there was still lack of demand for the product, prompting him to urge fund managers to participate in Islamic fund management to create more awareness.
Notably, Malaysia was home to the world’s largest unit trust industry, with 169 Syariah-compliant funds, he said.
Assets under management (AUM) for Islamic funds stood at approximately RM80bil last year, up RM32bil or 66.7% from RM48bil in 2010, he added.
He also said the RM80bil represented about 16% of the total funds industry.
“By 2020, the SC has projected the Islamic fund management industry’s AUM to expand to RM322bil,” he said.

(The Star Online / 05 Sept 2013)

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Malaysia: KL to be Islamic wealth management hub

KUALA LUMPUR (Sept 4, 2013): The Securities Commission (SC) aims to position Malaysia as an Islamic wealth management centre, a target that is highly feasible because of the country's high savings rate.
Chairman Datuk Ranjit Ajit Singh said to this end, steps were being taken to create a certain number of intermediaries in the area.
"This is the effort that we are collectively pursuing now. The strategy is that we are getting some firms to come in," he said at a public lecture today.
The lecture, titled "Positioning Malaysia as an Islamic Wealth Management Marketplace -- A Regulator's Perspective", is organised by BNP Paribas Malaysia Bhd and the International Centre for Education in Islamic Finance.
Ranjit said this in response to a question on how Malaysia could be an Islamic wealth management centre.
As of July 2013, there were 19 licensed Islamic fund management companies in Malaysia, according to the SC's website.
Ranjit said currently, the Islamic fund management companies enjoyed tax incentives.
He said players should look into innovative solutions that could be offered to their clients.
Earlier, in his lecture, Ranjit said Malaysia's assets under management of Islamic funds were expected to hit RM322 billion by 2020 from RM80 billion end-2012.
He said the RM80 billion represented about 16% of total industry assets, thus there was strong demand for the local Islamic funds.
"As a result, Malaysia has emerged as the world's largest sukuk market, accounting for almost 70% of global sukuk outstanding.
"Malaysia is also home to the world's largest unit trust industry with 169 syariah-compliant funds," he said.
Following this, he said, there was a significant scope for Malaysia to continue innovating and expanding the Islamic market place by generating broader approach with regional countries.

(The Sun Daily / 04 Sept 2013)

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