Bursa Malaysia, formerly the Kuala Lumpur Stock Exchange, hitherto known for its Shariah-compliant equities universe, is attracting listings by both the big-hitting Malaysian issuers such as Khazanah Nasional Berhad, the Malaysian sovereign wealth fund and the investment arm of the Ministry of Finance; Petroliam Nasional Bhd (Petronas), the national oil company; and Cagamas MBS Bhd (Cagamas MBS), the national mortgage corporation; and major international issuers such GE Capital, the finance subsidiary of General Electric (GE) of the US.
The buoyancy of Bursa Malaysia’s regional and global marketing strategy which is often executed in tandem with the Malaysia International Islamic Finance (MIFC) initiative and roadshows, has unleashed a healthy albeit undeclared rivalry between the main exchanges that are currently listing sukuk around the world. These include Nasdaq Dubai, the London Stock Exchange, Luxembourg Stock Exchange and Bahrain Stock Exchange.
Nasdaq Dubai is Bursa Malaysia’s main rival. According to Nasdaq Dubai, the nominal value of sukuk listed on the bourse totaled about $15.7 billion at end November 2009. Some of the more notable sukuk listings on Nasdaq Dubai include the $1.5 billion trust certificates (Sukuk Al-Mudaraba) issued by DP World Funding Limited and which matures in 2017; the $200 million convertible trust certificates (Sukuk Al-Mudaraba) IIG Funding Limited and due in 2012; and the AED7.5 billion trust certificates (Sukuk Al-Musharaka) issued by Jafz Sukuk Limited and also due in 2012.
The London Stock Exchange to date has some 20 Sukuk (alternative finance investment bonds) issuances listed with a total outstanding value of over GBP6.5 billion. Luxembourg Stock Exchange in contrast has 15 Sukuk listed with a total value outstanding of $7.3 billion. Similarly, Bahrain Stock Exchange has 10 Sukuk listed with a total value outstanding of $2.18 billion and BD330 million.
With the Sukuk market showing signs of recovery and receiving a major boost with issuances by prominent issuers such as the International Finance Corporation, the private sector funding and capital markets arm of the World Bank Group, and GE Capital, market players are confident that 2010 will be the beginnings of a bull market for sukuk, with the strong possibility of major new corporate issuers emerging from markets that have hitherto had no sukuk originations such as Korea, Luxembourg, Turkey, Russia, Hong Kong and possibly France and the UK.
Yusli Mohamed Yusoff, chief executive officer of Bursa Malaysia is confident that, despite the slowdown in trading activities and issuances in 2009, Bursa Malaysia has marked a new era of sukuk listings. “Our expedient achievement is reflective of Malaysia’s significance in the world of Islamic capital markets. Bursa Malaysia will continue to facilitate investors with the most conducive Islamic platform and will strive to remain in the leading position of Sukuk listing worldwide,” he explained.
He added that the positive commitment shown by market participants is a reflection of their confidence in the Islamic capital market underlined by a high level of governance and transparency, in which issuers are provided with the access to greater profiling opportunities on Bursa Malaysia.
The first Sukuk listing on Bursa Malaysia was registered in August 2009 with the inaugural listing of the $1.5 billion Petronas EMAS Al-Ijarah sukuk and the listing by Cagamas MBS Bhd (Cagamas MBS) of its RM100 million Islamic papers.
In November 2009, GE Capital Sukuk Ltd. issued its first foreign sukuk of $500 million on the bourse. A month later saw the listing of CIMB Islamic Bank’s RM2 billion subordinated sukuk program while Khazanah Malaysia listed its outstanding sukuk program amounting to $14 billion.
Malaysia, says Bursa Malaysia, is the world’s largest sukuk origination center driven largely by an investor-friendly regime, as well as a robust regulatory and Shariah framework.
