Last year, global sukuk issuance was just shy of $30 billion, and $8.6 billion of that was listed on Bursa Malaysia. In other words, the Malaysian exchange accounted for nearly one-third of global issuance.
And 2010 was a good year for the sukuk market, as the $30 billion raised globally was an increase of approximately 20% from the previous year and a two-fold increase from $15 billion in 2008.
Some of the notable listings in 2010 include: Sime Darby’s M$4.5 billion ($1.46 billion) Musyarakah sukuk; the government of Malaysia’s $1.25 billion global sukuk Al-Ijarah; and the Islamic Development Bank’s $3.5 billion sukuk. The total value of the sukuk programme listed on Bursa Malaysia as of the end of 2010 was $27.7 billion (from 19 deals by 17 issuers), which makes it the leading sukuk listing destination.
Raja Teh Maimunah, global head of Islamic markets at Bursa Malaysia, said that the “general consensus among industry players is that global sukuk issuance for 2011 will surpass the record high of $34.2 billion in 2007. As Malaysia has a well-established legal and regulatory framework to support sukuk issues, we are hopeful that 2011 holds greater promise in this space for us.”
Raja Teh added: “We are seeing issuers more willing to list their issues and be subjected to reporting and disclosure requirements in order to attract investors as the credit crisis has caused investors to be more aware of the importance of transparency. (They) are thus demanding greater governance. We see this as a positive development as the industry steps to the next level in embracing higher governance standards.”
Meanwhile, Bursa Malaysia also recently introduced a Shar’iah-compliant regulated commodity trading platform -- Bursa Suq Al-Sila’ -- which has 33 registered members, ranging from financial institutions, commodity suppliers and financial brokers. The idea is that the platform can help Islamic banks to better manage liquidity and financing using the contract of commodity murabaha. This is a financing structure that enables an intermediary to buy something with free and clear title to it. The intermediary and prospective buyer then agree upon a sale price (including an agreed-upon profit for the intermediary) that can be made through a series of instalments, or as a lump sum payment. Murabaha is not an interest-bearing loan, which is considered riba (or excess), and so it is an acceptable form of credit sale under Shar'iah. According to Bursa Malaysia, Bursa Suq Al-Sila’ is the first initiative of its kind in the world.
While the exchange-traded funds (ETF) industry in Malaysia is still developing and so is not a huge market, MyETF Dow Jones Islamic Market Malaysia Titans 25 was the first Shar'iah-compliant ETF introduced in Asia. The fund has assets under management of approximately M$600 million, which accounts for more than half of the total listed ETF AUM on Bursa Malaysia.
In the real estate investment trust (Reit) arena, Bursa Malaysia hosts three listed Islamic Reits, covering property assets in the healthcare, plantation and commercial sectors. Of them, Al-Aqar KPJ Reit was the first Islamic Reit in the world and Al-Hadharah Boustead Reit was the first Islamic plantation Reit in the world.
As for equities, in late November, the Securities Commission of Malaysia released an updated list of 846 Shar’iah-compliant securities approved by its Shar’iah Advisory Council. These securities constitute 88% of the total 961 listed securities on Bursa Malaysia, demonstrating its commitment to such products.