Islamic finance key to Asia and Middle East link, says MAS

During the World Islamic Banking Conference on Wednesday, MAS’s second-in-command, Jacqueline Loh, said countries throughout Asia, including Hong Kong, Singapore and Japan, were looking to increase their Islamic finance activities.

She pointed to work done by banks within the Arab States of the Gulf over recent years to expand operations in Asia by helping distribute Islamic funds to companies throughout the region. Work is also being done by the MAS, Loh said, to create “clarity and certainty” in the regulatory and tax treatment of sukuk. 

“Asia’s stronger growth prospects compared to developed economies present opportunities for higher investment returns, which would in turn increase the demand for Shariah-compliant assets in Asian markets, including Singapore, Malaysia and Indonesia,” she said.

LOH pointed to Mergermarkets 2014 survey which said investments from Asia into the Gulf would soon equal that traditionally sourced from Europe, as Asian companies become more active in the Middle East. 

“In the meantime, it will be important to continue to strengthen key foundations such as global regulatory standards and best practices for Islamic finance,” she added.

Islamic banking assets in Singapore have grown by 73% since 2010 and are increasingly cross-border in nature, MAS figures show. 

(International Adviser / 07 June 2015)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Mideast sukuk issuance seen over $14bn in 2012

The issuance of Islamic bond, or sukuk, in the Middle East could reach over $14bn this year, according to HSBC, as investor demand and the relatively lower volatility of the asset class drive sales. 

HSBC forecasts global sukuk volumes of $44bn in 2012, of which the Middle East region could comprise just over 30%, the bank’s Islamic arm Amanah, said yesterday.
Malaysia will continue to dominate sukuk issuance, with about 60% of total volumes forecast globally. 

“One of the key drivers of this will be the continued level of liquidity within the overall Islamic investor base, whether in Middle East or Asia, the market is still very much characterised by a high degree of liquidity and relatively limited levels of supply,” said Mohamed Dawood, managing director of Islamic global markets for EMEA. 

“From a volume, country, and issuer perspective, 2012 is going to be a year when this market will continue to make its mark.” 

Asked whether a possible sukuk default by UAE’s Dana Gas would affect forecast sukuk issuance this year, Dawood said it wouldn’t be “helpful”.

Dana Gas has a $920mn sukuk maturity due in October. It has hired Deutsche Bank to advise on the Islamic bond and address investor concern on a repayment plan. 

The UAE and Saudi Arabia are likely to dominate the regional sukuk issuance landscape. So far this year, Emirates Islamic Bank and First Gulf Bank, as well as private corporate and a first-time issuer, Majid Al Futtaim Holding, have issued sukuk. 

In Saudi Arabia, the General Authority for Civil Aviation (GACA) issued a $4bn equivalent riyal-denominated bond in January. “We increasingly expect that businesses consider sukuk as a reliable and permanent source of capital (in Saudi Arabia) ... and the number of investors and the appetite for sukuk is growing,” said Muhammad Farhan, head of Islamic Finance at HSBC Saudi Arabia.

(GulfTimes,07 March2012)

---
Alfalah Consulting - Kuala Lumpur:
www.alfalahconsulting.com
Islamic Investment Malaysia:
www.islamic-invest-malaysia.com