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Malaysia sharia bank launches fund, sees opportunity

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Points of Essence:

  • Malaysian based Asian Finance Bank is appointed a distributor for RM 1 billion fund to to market the ASEAN Sharia Governance Fund in GCC countries. Gulf investors are expected to take up half of the fund and the rest by Malaysian investors.

KUALA LUMPUR, Oct 23 (Reuters) – Malaysian Islamic lender Asian Finance Bank launched a 1 billion ringgit ($282.2 million) Islamic fund on Thursday, saying the global downturn presented an opportunity for investors to buy assets on the cheap.

The ASEAN sharia corporate governance fund, which allows investors in the Gulf Cooperation Council (GCC) countries to invest in ASEAN firms, comes as a global downturn is hurting corporate profits and sending financial markets into a free fall.

Asian economies and companies have, so far, weathered the crisis better than their Western counterparts although analysts think it is only a matter of time before the contagion spreads.

“This is the most opportune time for us to take advantage of the undervalued assets in the region,” Asian Finance chief executive Mohamed Azahari Kamil told reporters.

“The emphasis is on corporate governance and especially after the financial meltdown, the emphasis of investors has always been on management and for transparency and corporate governance.”

ASEAN comprises Singapore, Thailand, the Philippines, Indonesia, Malaysia, Brunei, Vietnam, Laos, Cambodia and Myanmar.

Asian Finance, which is backed by Gulf investors, will distribute the fund while fund manager Corston-Smith Asset Management would manage it.

Azahari said Gulf investors are expected to take up about half of the fund while the rest would be from Malaysians.

Qatar Islamic Bank and its associates have a 70 percent share in Asian Finance. RUSD Investment Bank Inc of Saudi Arabia has 20 percent and Global Investment House of Kuwait has 10 percent.

Middle East investors have flocked to Malaysia in recent years, pouring their money into projects ranging from property to biodiesel, drawn in part by the country’s fast-developing Islamic finance industry.

The Malaysia International Islamic Financial Centre, a central bank-led body to develop the industry, said on Thursday it was visiting Kuwait and Saudi Arabia to drum up investor interest in the Southeast Asian country.

Malaysia wants to be a global Islamic finance hub, specialising in the origination of Islamic bonds, Islamic fund and wealth management and international Islamic banking and insurance.

Malaysia has the world’s largest Islamic bond market, with $66 billion or 62.6 percent of global outstanding sukuk issuance as at end-June.

Azahari said Islamic banks were likely to be less severely affected by the current crisis, than conventional lenders.

“We do not have any instruments where it’s on credit default swaps or any over leveraging position,” he said.

“There could be some exposure in terms of foreign exchange but on a product-to-product basis, I don’t anticipate any much dent.”

($1=3.544 Malaysian Ringgit)

(Reporting by Liau Y-Sing, Editing by Jacqueline Wong)



Written by Suapi Shaffaii

October 23, 2008 at 10:20 pm

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