Chi­nese groups tap into Malaysia’s sukuks

China Daily (Hong Kong) - - BUSINESS -


Pro­ceeds from the bonds will be chan­neled to fi­nance the project, Tadau En­ergy said in a state­ment.

Chi­nese prop­erty gi­ant Coun­try Gar­den’s Malaysian unit, Coun­try Gar­den Real Es­tate, was the first Chi­nese com­pany to is­sue Is­lamic bonds in Malaysia. In 2015, the group made a de­but sales of sukuk from a 1.5 bil­lion ring­git pro­gram.

Lee Heng Guie, the ex­ec­u­tive di­rec­tor of the So­cio-Eco­nomic Re­search Cen­ter, said that more Chi­nese com­pa­nies are look­ing into sukuk as the Malaysian gov­ern­ment has been pro­mot­ing it.

More­over, it has also been proven that sukuk is more sta­ble when the mar­ket is weak.

He added that the par­tic­i­pa­tion of Chi­nese com­pa­nies in the sukuk mar­ket will spur mar­ket ac­tiv­i­ties in Malaysia’s cap­i­tal mar­ket, and Malaysian banks will there­fore ben­e­fit along the fund­ing chain.

Malaysia’s sukuk mar­ket ac­counted for 41.1 per­cent of to­tal global sukuk mar­ket of $72.9 bil­lion in 2016, ac­cord­ing to RAM Rat­ing Ser­vices.

Last year, Malaysia’s do­mes­tic sukuk mar­ket stood at 661.9 bil­lion ring­git, 9 per­cent higher than 608.5 bil­lion ring­git in 2015. It was also 29 per­cent higher when com­pared with the to­tal out­stand­ing do­mes­tic con­ven­tional bond mar­ket of 513 bil­lion ring­git in the same year.

De­spite weak mar­ket con­di­tions, an­a­lysts shrugged off con­cerns over sub­scrip­tion.

“From in­sti­tu­tional in­vestors’ point of views, there is al­ways a de­mand for sukuk, be­cause most in­sur­ance com­pa­nies, pen­sion funds, or even gov­ern­ment agen­cies, pre­fer to in­vest in sukuk for their Syariah (Is­lamic re­li­gious law) com­pli­ance man­date,” Phillip Mu­tual Bhd Chief Strate­gist Of­fi­cer Phua Lee Kerk said.

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