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Bursa Malaysia Adds Inter-Pacific to Islamic-Compliant List

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KUALA LUMPUR (June 20): Bursa Malaysia Bhd has added Inter-Pacific Securities Sdn Bhd to the bourse operator and regulator’s Islamic participating organisations list to further grow the Islamic capital market.

Bursa Malaysia said in a statement today that Islamic stockbroking services played an important role, under which clients’ funds were placed in Shariah-compliant accounts.

“With the latest addition, investors will have a wider choice of Islamic POs (participating organisations) to represent them, which is in line with the priority of Bursa Malaysia-i, to provide a conducive marketplace for the Shariah investing community and to spur the growth and vibrancy of the Islamic capital market domestically and regionally,” Bursa Malaysia chief executive officer Datuk Seri Tajuddin Atan said in the statement.

According to Bursa Malaysia’s statement, Inter-Pacific is the 12th stockbroking firm under Bursa Malaysia’s Islamic participating organisations list.

The list includes Affin Hwang Investment Bank Bhd, AmInvestment Bank Bhd, BIMB Securities Sdn Bhd, CIMB Investment Bank Bhd, Hong Leong Investment Bank, Jupiter Securities Sdn Bhd, Kenanga Investment Bank Bhd, Malacca Securities Sdn Bhd, Maybank Investment Bank Bhd, RHB Investment Bank Bhd and TA Securities Holdings Bhd.

Originally published on www.theedgemarkets.com

 

Push for Mergers Among Islamic Banks and Non-Bank Lenders in Malaysia

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CONVENTIONAL banks aside, there is a push by industry players for mergers and acquisitions (M&A) to take place in the crowded Islamic banking as well as the non-bank lender space.

There are 16 Islamic banks in Malaysia.

Two are full-fledged standalone banks: Bank Islam (M) Bhd and Bank Muamalat Malaysia Bhd.

Eight more are subsidiaries of conventional banks, while the remaining are foreign banks.

 Non-bank lenders include entities such as the Government-owned Bank Kerjasama Rakyat Malaysia Bhd (Bank Rakyat), Bank Simpanan Malaysia, Bank Pertanian Malaysia Bhd and Malaysia Building Society Bhd (MBSB).

“There is no need for the spaces to be as fragmented as they are now as the country moves up the value chain,” says an analyst.

Having said that, he points out that some of the banks really need to improve their non-performing loans and balance sheets.

“Efficiency and productivity have to permeate across the entire ecosystem, be it conventional or otherwise,” he adds.

M&A activities in this particular sectors of the banking industry will also open up opportunities for major institutions to see how they can participate in them.

It was reported recently that Permodalan Nasional Bhd (PNB) which is the country’s largest fund management company, is believed to be open to the idea of acquiring Bank Rakyat in a move which could lead to value creation between Bank Rakyat and PNB-controlled companies.

Besides the MIDF Group which is the investment banking and asset management arm of PNB, the fund also controls Malayan Banking Bhd (Maybank) – the largest bank in the country that also has a regional presence.

PNB has a 60% stake in Malaysia’s only national reinsurer, MNRB Holdings Bhd which is grossly under-valued

Following the effects of the Asian financial crisis in the late 1990s, Bank Negara had called for a consolidation of the country’s then almost 60 financial institutions of which over 20 were local commercial banks.

Today, the country has eight local banking groups.

Nevertheless, while consolidation has happened in the conventional banking industry, new licences had been issued within the Islamic banking space to more Islamic banks like Bank Muamalat, Kuwait Finance House, Asian Finance Bank (AFB) and Al Rajhi Bank, resulting in the overcrowded situation.

Of the banks, AFB however is currently in talks with MBSB for a proposed merger.

Meanwhile, PT Bank Mandiri Tbk, Indonesia’s largest bank by assets, is soon expected to start operating here with full banking rights.

Bank Mandiri currently operates in Malaysia under the licence of remittance office.

 Originally published on www.thestar.com.my

Islamic Banks Expand, But ‘Double-Digit Growth Spree May be Over’

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Islamic banks have continued to expand their balance sheets and capital buffers, but the era of double-digit growth rates could be coming to an end while asset quality concerns creep up, an industry oversight body said recently.
Islamic finance, which has its core markets in the Middle East and Southeast Asia, follows religious principles that forbid interest and shun outright speculation, and as such is seen as an alternative to interest-based banking.
That proposition is underpinned by claims that Islamic finance can weather, if not avoid, the kind of financial turmoil that has embroiled conventional banking in recent years.
Islamic banks have indeed expanded but uncertainties in the global economy and political disquiet have taken their toll, the Islamic Financial Services Board (IFSB) said in its fifth financial stability report. Although it was weathered those challenges, the industry has moved away from double-digit growth rates enjoyed in previous years, the IFSB’s acting secretary-general Zahid ur Rehman Khokher said.
“This slowdown underscores the importance, more than ever, of strengthening the resilience of the Islamic financial system and addressing internal weaknesses and vulnerabilities.”
An IFSB survey of 170 Islamic banks and 83 “Islamic windows” in conventional banks across 17 countries found their combined assets grew by 10.9% to reach $1.4tn at the end of September 2016.
Islamic banks extended $939bn in financing during that same period, up from $826bn a year earlier, while their capital adequacy ratios remained above regulatory requirements.
Despite this, the asset quality of Islamic banks is deteriorating: Their net non-performing financing to capital ratio increased sharply to 25.6% at the end of September, up from 16.1% a year earlier.
In addition, the short-term liquidity of Islamic banks continues to be an area of concern, the IFSB said.
The IFSB also released findings of a study of stress-testing of Islamic banks conducted earlier this year.
The study found important links between four macroeconomic variables – namely interest rates, unemployment, real estate prices and oil prices – and the non-performing financing ratios, deposits, financing and assets of Islamic banks.
There are some bright spots, with the wider Islamic finance industry growing to $1.9tn in assets, with strong gains in sectors including Islamic insurance or takaful.
Takaful remains a small segment of the industry but contributions have grown by 12%, compared to 4% for conventional insurers, the IFSB said.
Scale remains a challenge for takaful firms, although the IFSB said it expected consolidation efforts to continue in the sector.

Originally published on www.gulf-times.com

Malaysian Incubator Signs Deal to Boost China’s Halal Exports

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A Malaysian technology and energy incubator has agreed to collaborate with companies in Hong Kong and China to produce and market halal-certified foods internationally.

In a stock market filing, Asia Bioenergy Technologies said its Asiabio Capital subsidiary had signed a memorandum of understanding with YRZC International, Shan Xi Hong Hui Food (SXHHF) and Shan Dong Wang Jia Yuan Zi Halal Food Brewing (SDWJYXHFB) last week to “establish collaboration and explore opportunities to develop, produce and export halal-certified food products to the global marketplace.”

The agreement slots into China’s “One Road One Belt” economic policy, which aims to see 65 countries across Asia, Africa and Europe linked commercially by land and sea—albeit with a halal spin.

“This signifies our intention [to build] physical support and infrastructure for a halal food and product hub in China,” said AsiaBio Capital’s David Chen Kon Fook.

“We have identified YRZC as our exclusive business development agent for such a purpose, and aim to tap into the expansive network via our diverse incubatees,” he added.

One of these, NetX Holdings, recently announced its intention to build a similar e-commerce halal marketplace in Hangzhou, having acquired a controlling stake in China-based Flavours of Malaysia, which markets speciality Malaysian products in the Far East.

Flavours of Malaysia will establish new fulfilment centres in Hangzhou which will “conduct research and development on Chinese national acceptance of Malaysian products and to use the research findings to acclimatise the product to suit the local taste buds,” NetX said in a statement.

 Under the terms of the latest agreement, Asiabio Capital will act as a halal-certified “channeling centre” and regulatory liaison body for product development and quality, while YRZC of Hong Kong, which is involved in a number of diversified fields from television production to brand marketing and promotion, has been appointed as an exclusive business development agent in China.

Together, these companies will take SDWJYXHFB and SXHHF products and apply for Halal-certified licences from the Malaysian halal regulator, Jakim.

SDWJYZHFB, located in Shandong, China, is mainly a halal food brewing company with jujube vinegar as its main product.

Shaanxi Weinan City-based SXHHF, meanwhile, operates in baked goods, sesame seeds, bakery flours and sugar production.

“All parties will carry out research and development on the new product lines which will be integrated with both Chinese Culture and Islamic religious doctrine in order to create a brand which is ‘trusted’ and halal-certified,” he filing said.

  • Originally published on Ewww.foodnavigator-asia.com

Malaysia’s Felda Global Shelves $350 Mln Islamic Bond Issue

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KUALA LUMPUR, June 9.An investment holding company of Felda Global Ventures Holdings has shelved plans to sell an Islamic bond in Malaysia, IFRreported on Friday, after investigators raided the parent FGV‘s headquarters following allegations of corruption.

FGV Seri Costa had filed 1.5 billion ringgit ($352 million) sukuk wakalah programme with Malaysia’s securities regulator and sole arranger Maybank was finalising documents for a bond issue, IFR said. The sale is likely to be suspended indefinitely amid uncertainties at the parent firm, IFR added, citing bankers.

FGV was not immediately available for a comment.

The world’s No.3 palm plantation group has begun an internal probe into some transactions at a subsidiary, while FGV’s board suspended its Chief Executive Officer Zakaria Arshad and three others earlier this week.

The CEO has denied wrongdoing and called on the Malaysian Anti-Corruption Commission (MACC) to conduct its own investigation. Officials from MACCspent nearly eight hours at FGV’s headquarters on Thursday, seizing documents and interviewing company officials.

“MACC is currently in the process of reviewing the documents that were seized to collect evidence relating to the investigation before further action is taken,” MACC Deputy Chief Commissioner Azam Baki said in a statement.

“MACC will begin to call witnesses and individuals involved to help with the investigation shortly,” he added.

The investigation focuses on six issues involving FGV, he said, without providing any details.

Turmoil at FGV – whose biggest shareholder is state-owned Federal Land Development Authority – could hurt Prime Minister Najib Razak, who government sources say is expected to call elections later this year.

FGV shareholders, many of them small landowners, form a key vote bank for Najib‘s ruling alliance in battleground states.

Originally published on www.timesofindia.indiatimes.com

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