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Wednesday, 3 May 2017

(The Star) Wahid: Malaysia lacks listed Islamic financial stocks

KUALA LUMPUR: The listing of more Islamic financial institutions on Bursa Malaysia is needed to boost the Islamic fund and wealth management industry going forward.

Permodalan Nasional Bhd (PNB) group chairman Tan Sri Abdul Wahid Omar said this would also strengthen Malaysia’s position as a global hub for such funds.

He said of the 672 syariah-compliant securities listed on the local bourse, omly two were from the finance sector, namely BIMB Hodings Bhd and Syarikat Takaful Malaysia Bhd.

“The finance sector has thus the lowest number of syariah-compliant listed securities available.It also places the percentage of syariah- compliant securities under the sector at only 6%,” he told the International Islamic Fund and Wealth Management Forum here yesterday.

He said the shortage of listed Islamic finance institutions could pose big challenges to the industry, especially for the government linked investment companies (GLICs) such as PNB, Lembaga Tabung Haji, and Kumpulan Simpanan Pekerja, as they are expected to provide syariah compliant dividends to Muslim investors in Malaysia.

As such, it is impossible to provide a competitive return if GLICs have to avoid investing in the financial sector, since there are only 6% of syariah-compliant securities listed on Bursa Malaysia, he added.

He also suggested three possible ways to further grow the industry.

The first is the formation of a second listed Islamic universal banking group, apart from BIMB Holdings, which could be anchored by Malaysia Building Society Bhd (MBSB), Bank Muamalat Malaysia Bhd, Malaysia Industrial Development Finance Bhd (MIDF) or one of the larger foreign-owned Islamic banks.

The listing of some of Islamic Development Finance Institutions such as Bank Simpanan Nasional and Bank Rakyat is a second option.

The third approach is the creation of a separate listing of “Islamic” or “i-share” among banking groups that have sizeable Islamic finance activities embedded within them, such as Maybank, CIMB and RHB.

“For example, up to 25% of Maybank”s profit is derived from Islamic finance.

“Since Maybank Islamic is a wholly-owned subsidiary and an integral part of Maybank, we can designate say 20% of the latter”s shares as Islamic shares, via some ring fencing arrangements,” he explained.

He said based on Maybank’s market capitalisation of RM97bil, this initiative would create a new class of syariah compliant investment instruments worth RM19bil.

“Of course this will require a lot of consultations with the Securities Commission, Bank Negara and Bursa Malaysia.

“With positive thinking in trying to solve a problem, I believe we can come up with the right solutions,” he later said at a press conference. – Bernama