Wednesday 7th October 2015
NEWS TICKER: Wednesday, October 7th: Vistra (UK) Limited ('Vistra') is pleased to announce the appointment of Barry Gowdy as Director, effective 1st October. Gowdy joins Vistra from RBC Wealth Management, where he was responsible for the firm's UK property trust clients – According to NIBC the labour market report for September is one indicator that US economy is losing momentum. It is a view reflected by the weakening of business confidence surveys and a more moderate pace of job growth over the last few months. Although not related to the problems that have engulfed emerging markets over the last summer,, it appears that US businesses have on average accumulated too much in inventories. The number of non-farm payrolls increased by only 142k, whereas 200k was expected and the August reading was revised downwards from 173k to 136k. Additionally, underlying figures indicate that a relatively strong boost in the number of jobs in the public sector camouflaged the weakness in private sector job gains. Market participants were probably also intrigued by the slow rate of hourly wage (earnings) growth. These stayed flat in September compared to August, while the annual rate of wage growth stayed at 2.2%, in line with the annual rate in between 2.0 and 2.5% range this year - Global Jet Capital, a provider of financing solutions for large-cabin, long-range private jets, has agreed to purchase the aircraft lease and loan portfolio of GE Capital Corporate Aircraft in the Americas representing approximately $2.5bn of net assets. Shawn Vick, executive director of Global Jet Capital says, “We are investing heavily in growing the business both organically and through strategic acquisitions such as this one with GE. This is a prime example of our industry expertise and investment capital coming together to evaluate and identify an opportunity to expand the business in a disciplined, carefully measured way.” The price point of the aircraft range between $25m and $75m on average, and corporate users and high net worth individuals will seek competitive financing solutions rather than allocate their own cash resources which are better invested in their own businesses - Gresham Computing plc, a provider of real-time financial transaction control and enterprise data integrity solutions, today announced the appointment of Damian Canning as Sales Director for North America. Based in Gresham’s New York City office, Canning will be responsible for continuing the strong growth of Gresham’s Clareti Transaction Control (CTC) platform in North America - Spending on food, entry fees, insurance and entertainment over the three day Eid al-Adha festival, some 300,000 Saudis spent SAR400m ($107m), according to local press reports. Bahraini officials report higher than usual tourist inflows and spending. Roughly 50% of those who checked in the kingdom’s hotels were nationals of member states of the Gulf Cooperation Council, enjoying Bahrain’s more relaxed ambience - The Philippine unit of Royal Dutch Shell Plc said on Monday it was looking to launch a long-delayed initial public offering (IPO) sometime next year, and may sell even more than the minimum requirement of 10 percent of common stock. "We're getting ready for it," Shell Philippines Country Chairman Edgar Chua told reporters on the sidelines of a Shell event. "We've discussed it with the (Philippines Department of Energy), it's just a question of timing." Pilipinas Shell Petroleum Corp, which operates one of the country's two refineries, is required under a nearly two-decade local law to conduct an IPO. The company had previously cited unfavourable market conditions and the need to upgrade its local refinery in deferring a share sale. Shell's refinery upgrade is underway and could be completed hopefully by the middle of November says a Shell spokesman - European regulators have approved the London Stock Exchange's plan to link the operations of LCH.Clearnet and EuroCCP to offer investors more choice for clearing their trades on the UK bourse. The link is set to begin October 26th - The Straits Times Index (STI) ended 58.1 points or 2.08% higher to 2851.25, taking the year-to-date performance to -15.27%. The top active stocks today were SingTel, which gained 2.81%, DBS, which gained 2.36%, UOB, which gained1.64%, OCBC Bank, which gained2.05% and CapitaLand, with a 2.49%advance. The FTSE ST Mid Cap Index gained 1.45%, while the FTSE ST Small Cap Index rose 1.04%. - Morningstar has downgraded the Aberforth UK Small Companies fund to a Morningstar Analyst Rating™ of Silver. The fund previously held a Gold Rating. Samuel Meakin, manager research analyst at Morningstar, said: “Following a recent Morningstar Analyst Ratings meeting, we have moved the Aberforth UK Small Companies fund to a Morningstar Analyst Rating of Silver. The fund was previously rated Gold. Whilst we still hold the fund in high regard, the recent and upcoming changes to the management team have slightly reduced our level of conviction. Andy Bamford, one of the fund’s six managers, is set to retire at the end of this year; he follows David Ross, who retired in 2014.” - Rubicon Minerals Corporation (TSX: RMX)(NYSE MKT: RBY) was asked by Canada’s Ministry of Environment and Climate Change (MOECC) on September 30th to temporarily suspend mill operations at the Phoenix Gold Project) to treat elevated ammonia levels, discharge sufficient water from the tailings management facility (TMF), and to upgrade the TMF, under specific timelines. It also ordered Rubicon to undertake other operational and reporting obligations, including construction upgrades to the TMF. The company has been utilizing alternative technologies to address the ammonia levels in the TMF - LIFE, the global diaspora organisation of Lebanese finance executives says it has signed an academic partnership with Cambridge Judge Business School, the business school of the University of Cambridge – Figures shows that the United Kingdom’s HMRC collected a record £7.5bn in stamp duty from residential property transactions in 2014/2015, up from £6.45bn the previous year and from £4.9bn in 2012/2013 and the total tax collected from home buyers in the UK has grown by 165% over the last six years alone. Transactions in London contributed the most residential stamp duty revenue at just over £3bn, followed by the South East at £1.6bn and between 2008/2009 and 2014/2015, stamp duty revenues in London have grown by 248%, compared to around 158% in the East of England and 140% in the South East. The latest analysis reports from both Knight Frank and Savills look into the effect of this on the prime market in London and both conclude that the stamp duty changes introduced last December are still having an effect on sales 10 months on.

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Malaysia offers tax breaks to secure dominance of sukuk issues

Wednesday, 23 May 2012
Malaysia offers tax breaks to secure dominance of sukuk issues Malaysia is offering tax breaks to issuers in an effort to secure its global dominance of Islamic finance. It seems to be working, there appears to be a record rally in foreign-currency sukuk. Moreover, arrangers say interest is increasing among local corporate issuers; with Standard Chartered claiming a growing issuance pipeline worth $1bn, most of which will be in foreign currency denominated bonds.

Malaysia is offering tax breaks to issuers in an effort to secure its global dominance of Islamic finance. It seems to be working, there appears to be a record rally in foreign-currency sukuk. Moreover, arrangers say interest is increasing among local corporate issuers; with Standard Chartered claiming a growing issuance pipeline worth $1bn, most of which will be in foreign currency denominated bonds.

Malaysia is seeking to strengthen its lead over the Gulf Cooperation Council countries as a centre of Islamic finance. It hopes to become a capital markets issuance hub, and in an effort to secure its place in the pantheon of issuing markets has announced that it is exempting investors from capital gains taxes on non-ringgit sukuk between now and the end of 2014. It is a smart move, given that more Asian companies see sukuk denominated in currencies other than the ringgit as an effective funding strategy. Malaysia has become the world’s leading sukuk market, accounting for some 73% of the $92bn of sukuk issued globally last year; a banner year in which issuance volume rose by 68% on 2011. Malaysia is also the domicile for 68% of the $210bn total sukuk outstanding globally as at end-2011, according to recent figures issued by the Securities Commission in Malaysia.

Nonetheless, there is some way to go and sales of foreign currency bonds issued out of Malaysia have topped only $358m so far this year, compared with a grand total of $2.1bn for the whole of last year. The signs are that the Malaysian authorities have discounted this year for foreign currency denominated ringgit and have introduced a raft of initiatives in the hope of capitalising on better global market conditions in 2013 and beyond. Ringgit sukuk however continue to outstrip issuance in foreign currency.

Khazanah, the country’s sovereign-wealth fund alone, sold $358m of seven-year bonds convertible into shares at a negative yield in March alone. However, that was pretty much a plain vanilla deal for the issuer, which is rated A3 by Moody’s. Sukuk watchers may remember that the fund issued the first yuan-denominated Shari’a compliant notes in Hong Kong last year.

Corporate sales of ringitt denom­inated sukuk in Malaysia climbed 8% in the first quarter (compared with Q1 2011) to MYR13.4bn, after Tanjung Bin Energy raised MYR3.3bn in March in the biggest offering so far this year. Investor demand is also buoyant. A recent issue by Pembinaan BLT, the state-owned construction company, worth MYR1.35bn was over­subscribed 2.6 times.

Even so, the market infrastructure remains problematic and will likely dampen growth unless Malaysia can unlock key elements. Among them must rank a lack of secondary market liquidity; in particular the lack of secondary market trading. This is a problem of infrastructure and supply as well as a lack of formal trading mechanisms. Without an active secondary market liquidity and sustained fund manager participation in the market is not really feasible.

Once the Kuala Lumpur-based International Islamic Liquidity Management Corporation (IILM) is up and running properly, the resulting intermarket dialogue should spur member states and the central bank executives that represent them in the corporation should help (over the longer term) should help to mitigate this lack of market liquidity. The IILM is supposed to facilitate cross-border liquidity management among institutions offering Islamic financial services by making available a variety of Shari’a-compliant instruments, including sukuk, on commercial terms, to suit the varying liquidity needs of these institutions. The IILM, of which the Saudi Arabian Monetary Agency (SAMA) is a founding member, is due to launch its debut benchmark sukuk within the next two months. Some $3bn of issuance is expected to originate out of the IILM each year.

For now, Malaysia is managing to retain the initiative and remains the most developed systemic Islamic financial market and an active secondary trading market. However, it is not the largest liquidity pool in Islamic finance; that honour goes to Saudi Arabia, which is potentially the largest sukuk origination market; though again, local infrastructure limitations are apparent. Very few sukuk, for instance, are traded on the Tadawul and the market remains firmly domestic.

According to the latest data of the Securities Commission Malaysia, between 2000 and 2010, the First Capital Market Masterplan period, the local Islamic capital market more than tripled in value to MYR1.05trn, growing at an annualised rate of 13.6%. The Second Capital Market Masterplan, or CMP2, which spans the ten-year period to 2020 (please refer to FTSE Global Markets, Issue 57, pages 55 to 60 for more information), expects Malaysia’s Islamic capital market to grow by an average 10.6% a year, to reach just under MYR3bn by 2020, of which sukuk segment will account for 46% of the total.

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