Thursday October 18, 2012

SC: Total sukuk issuance at RM219.4bil

KUALA LUMPUR: The total sukuk issuance in Malaysia amounted to RM219.4bil during the first eight months of 2012 against RM120.7bil in the previous corresponding period, contributed in part by the largest issuance to date of RM30.6bil by Projek Lebuhraya Usahasama Bhd.

Securities Commission (SC) executive director Zainal Izlan Zainal Abidin said 2012 witnessed encouraging performance of the Islamic capital market and the sukuk segment was set to register another record year in terms of total issuance value.

“The listing of Felda Global Ventures Holdings Bhd and IHH Healthcare Bhd, which collectively raised almost RM16bil, have helped to bolster the Islamic equity segment this year. Both companies had applied to the SC’s Shariah Advisory Council to determine their syariah-compliant status prior to their respective listings,” he said in his keynote presentation on the updates on Islamic capital market at the Kuala Lumpur Islamic Finance Forum 2012 yesterday.

He noted that the healthy growth of the Islamic capital market was occurring not only in Malaysia but also on the global front, with total sukuk issuance value at US$93bil (RM282.3bil) in the first eight months of 2012.

Of this, Malaysia accounted for 74%, exceeding the amount recorded for the whole of last year.

In the equity segment, the market capitalisation of the Dow Jones Islamic Market World Index, the rough estimate of the size of syariah-compliant equities globally based on Dow Jones’ Index Methodology and syariah screening criteria, rose to US$17.7 trillion as of August 2012, from US$16.5 trillion at end-2011.

Zainal Izlan said the development of Malaysia’s Islamic capital market over the years had been facilitated by the presence of an enabling environment and ecosystem that were regularly reviewed and continually enhanced.

The SC continued to play a central role in identifying and implementing initiatives to promote further development of the Islamic capital market, he said. — Bernama

“Some of the recent initiatives that we have embarked on, in line with the growth strategies described in the Malaysian Capital Market Masterplan 2 (CMP2), including establishing the framework for issuance of retail bonds and sukuk,” he said.

The CMP2, released in April 2011, among others highlighted the solid growth of the Islamic capital market over the 10-year period to 2010 of 13.6% per annum.

The growth momentum has been sustained with the size of Malaysia’s Islamic capital market increasing 10% to RM1.2 trillion as at end-2011, spurred especially by the strong performance of the sukuk segment.

Total value of sukuk outstanding rose by 18.7% year-on-year to RM349bil at end-2011.

In comparison, the market capitalisation of syariah-compliant equities grew by 6.6% to RM806bil over the same period.

Zainal Izlan said the introduction of retail bonds and sukuk would help to broaden the range of investment products available to the public by allowing retail investors access to a relatively low-risk instrument, thus also facilitating diversification for risk management. “Furthermore, retail sukuk will present another syariah-compliant investment option, and issuers with an opportunity to reach a wider investor base,” he noted.

In order to incentivise the participation of individual investors, the Government has proposed in Budget 2013 a stamp duty exemption on instruments relating to transactions on retail sukuk and bonds.

For the issuers, double deduction on additional expenses incurred for the issuance of retail sukuk and bonds had been proposed in order to enhance the cost competitiveness for domestic and foreign issuers to raise capital in Malaysia, he said. — Bernama

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