Potential of Islamic capital market remains promising at home and abroad – Bursa chairman

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KUALA LUMPUR (June 17): The potential of the Islamic capital market remains promising both at home in Malaysia and abroad, according to Bursa Malaysia Bhd chairman Tan Sri Abdul Wahid Omar.

During his keynote address at the Shariah Investing Virtual Conference 2020 today, which the local bourse organised with CGS-CIMB Securities, Abdul Wahid said that in Malaysia alone, the industry of Islamic funds had demonstrated impressive growth.

As of March, syariah funds stood at RM170 billion, representing 23% of total industry assets under management (AUM). Syariah unit trust funds' net asset value (NAV) stood at RM99 billion or 23% of total industry NAV.

“Continued promotion by the asset management industry can help contribute to a greater awareness of syariah investing in a broader group of investors.

"Under the second Capital Market Masterplan, the country’s Islamic financial sector is expected to sustain double-digit growth to reach almost RM3 trillion in 2020,” he said.

Abdul Wahid added that there are opportunities for further product innovation and development to provide investors with more syariah-based products, citing that real estate had been a significant part of asset allocation in the Islamic world and accounted for some of the largest syariah-compliant funds.

He said the equity market’s recovery can also help boost Islamic exchange-traded funds (ETFs) and capitalise on the growing global popularity of ETFs due to their easy accessibility, low-cost diversification and trading opportunities.

As of May, 732 of the 932 listed companies on Bursa or 79% of counters were syariah-compliant shares, with syariah market capitalisation making up 70% of total market capitalisation of RM1.6 trillion.

The average daily trading value (ADTV) of syariah-compliant securities made up 70% of the ADTV of RM2.8 billion.

Meanwhile, 71% of companies on the FTSE4Good Bursa Malaysia Index were both environmental, social and corporate governance (ESG) and syariah-compliant, with the index measuring the performance of Malaysia’s listed companies with strong ESG practices

“Additionally, our syariah indices have consistently outperformed their conventional counterparts over the last 10 years. For example, the FTSE Bursa Malaysia Hijrah Shariah Index, comprising the 30 largest syariah-compliant companies on the FTSE Bursa Malaysia EMAS Index, has consistently outperformed the FBM KLCI, growing about 32% between 2010 and May 2020,” he added.

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