This follows the recent launch in Kuala Lumpur in the presence of Zarinah Anwar, chairman of the Securities Commission of Malaysia, the capital markets regulator, of a pioneering Islamic investment fund by HwangDBS Investment Management Berhad and Asian Islamic Investment Management Sdn. Bhd. (AIIMAN) that is aimed at giving investors direct access to the highly restricted and lucrative China A-share market.
The promoters confirm that the target market for the $100 million HwangDBS AIIMAN A20 China Access Fund is indeed the GCC countries, especially investors in Saudi Arabia and in Dubai, Malaysia, Hong Kong, Brunei and Singapore.
China has huge potential for Islamic finance given that it is the world's most robust economy with double digit GDP growth rates forecast for the next few years; it is the manufacturing hub for the world; it has huge infrastructure development requirements; it boasts the world's largest liquidity; and it has a Muslim population of between 50 to 100 million.
China over the last year has attracted some Islamic investment out of Bahrain, the UAE and Malaysia, mainly in joint venture Islamic finance companies and real estate Mudarabas. Last year, a Malaysian entity even issued a sukuk backed by real estate assets in China and which is listed on the Hong Kong Stock Exchange. Indeed, Hong Kong is positioning itself to be the gateway for Islamic finance investments and opportunities in Mainland China, and is in the process of reviewing certain legislation to ensure tax and other neutrality for equivalent Islamic products such as sukuk, Murabaha and Ijarah.
The HwangDBS AIIMAN A20 China Access Fund, according to Nor Azamin Salleh, CEO and executive director of AIIMAN, is the first of its kind to be launched in Malaysia and globally.
The AIIMAN A20 fund is a $100 million Islamic wholesale fund that will invest into the 20 largest Shariah-compliant China A-share companies, in terms of their market capitalization, listed in Shanghai or Shenzhen stock exchanges. It is also the first non-ringgit Islamic wholesale fund and the first to focus on China A-shares. Hitherto, non-ringgit mutual funds authorized in Malaysia have been all retail funds.
AIIMAN, which is licensed by the Securities Commission of Malaysia, is a joint venture between Singapore's DBS Asset Management Limited and integrated financial specialist group, Hwang-DBS (Malaysia) Berhad.
"AIIMAN A20," stressed Nor Azamin Salleh at the launch in Kuala Lumpur, "provides us an excellent opportunity to promote and support Malaysia's aspirations to position the country as a one-stop global Islamic financial hub and as a launch pad for those seeking global Islamic financial opportunities. A20 is certainly a testament to Malaysia's ability to offer quality products, a well connected and supported financial network, and more importantly, local talent to sustain a growing industry."
Through HwangDBS IM and AIIMAN's regional ties with the DBS Group, AIIMAN A20 will be able to invest in Shariah-compliant certificates via five reputable and licensed Qualified Foreign Institutional Investor (QFII) holders.
China's equity markets is supported and driven by the huge domestic liquidity and sheer growth of the country's economy, which is heading once again to double digit GDP growth rates.
According to Nor Azamin Salleh, the Shanghai and Shenzhen Composite Index hit a high of RMB32.5 trillion as at the end of 2007, easily on par or more than Japan's older and more established market. Wealth created in China remains within the country due to capital control polices put in place by the local government in order to strengthen the domestic economy and indirectly lessen exposure to external market volatility. In a short span of two years, China's market capitalization grew by almost tenfold from RMB3 trillion in 2005 to RMB32.5 trillion in 2007.
