Wednesday 29th July 2015
NEWS TICKER, Tuesday July 28th: The Spanish Mercado Alternativo Bursátil (MAB) has admitted INCLAM to list on the market’s growth company segment. The company will trade from July 29th this year. Its trading code will be INC and trading will be through a price setting mechanism which will match buy and sell orders by means of two daily auction periods or “fixings”, at 12 hrs and at 16 hrs. Stratelis Advisors is acting as registered adviser and MG Valores SV as liquidity provider. - Moody's: Al Khalij Commercial Bank (al khaliji) Q.S.C.'s asset quality and capital strengths moderated by high reliance on market funding. Al Khalij Commercial Bank (al khaliji) Q.S.C. (AKB) benefits from a solid overall financial profile which is moderated by high reliance on market funding and concentration risks, says Moody's Investors Service in the report "Al Khalij Commercial Bank (al khaliji) Q.S.C: asset quality and capital strengths are moderated by high reliance on market funding" - While German SME’s continue to be plagued by recruiting problems, according to a new KfW survey fewer are bothered about filling employment vacancies than they were back in 2010. More women and older people in the working population, increasing labour mobility and the rise in skilled labour from other EU countries is helping filling the employment gap. Even so, the survey suggests that over the longer term, skilled labour shortages could be the order of the day – In a filing with the Luxembourg Stock Exchange Bank Nederlandse Gemeenten has given notice of amended final terms to the holders of TRY77.5m notes at 10.01% due June 17th 2025 (ISIN Code: XS1247665836 and Series no. 1214) issued under the bank’s €80bn debt issuance programme. The amendment includes provision that the issuer may settlement any payment due in respect of the notes in a currency other than that specified on the due date subject to pre-agreed conditions. Deutsche Bank London is the issuing and paying agent, while Deutsche Bank Luxembourg is listing agent, paying agent and transfer agent. The Shanghai Composite Index ended down 8.5% at 3725.56, its second-straight day of losses and worst daily percentage fall since February 27th, 2007. China's main index is up 6% from its recent low on July 8, but still off 28% from its high in June. The smaller Shenzhen Composite fell 7% to 2160.09 and the small-cap ChiNext Closed 7.4%. Lower at 2683.45. The drop comes as investors wonder how long the government’s buying of blue chip stocks can last. Clearly, the government can’t be seen to be pouring good money after bad to prop up what looks to be a failed strategy of propping up the market. Disappointing corporate earnings data across the globe has affected Asia’s main indices in today’s trading. The Hang Seng Index fell 2.7%. Australia's S&PASX 200 was down 0.2%, the Nikkei Stock Average fell 1% and South Korea's Kospi was off 0.4%. Turnover also remains depressed on Chinese exchanges, with around RMB1.2trn the average volume traded, compared to more than RMB2trn before this current downturn – In other news from the Asia Pacific, New Zealand’s Financial Markets Authority (FMA) has issued a Stop Order against Green Gardens Finance Trust Limited (GGFT) and warns the public to be wary of doing business or depositing money with this company. The Stop Order prohibits GGFT from offering, issuing, accepting applications for or advertising debt securities and/or accepting further contributions, investments or deposits for debt securities – Meantime, in Australia, the Federal Court has found that Astra Resources PLC (Astra Resources) and its subsidiary, Astra Consolidated Nominees Pty Ltd (Astra Nominees), breached the fundraising provisions of the Corporations Act, as part of civil proceedings brought by ASIC. In his judgment, Justice White upheld ASIC's claims that Astra Resources and Astra Nominees breached the Corporations Act by raising funds from investors without a prospectus or similar disclosure document, as required under the law.

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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. http://www.ftseglobalmarkets.com/

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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