Islamic Capital Market: Shariah Investing on Bursa Malaysia-i. Section A: Overview Islamic Capital Market

Transcription

1

2 Islamic Capital Market: Shariah Investing on Bursa Malaysia-i Section A: Overview Islamic Capital Market 2

3 How Bursa Malaysia Plays Its Role in ICM OTHERS Main Market: 782 cos ACE Market: 121 cos LEAP Market: 8 cos 20 Sectors that cover 68 economic activities Total Market Cap: RM 1.86 trillion We offer 14 derivatives products comprising commodity, equity and financial futures and options. Shariah Market Cap: RM1.16 trillion (62.4% of total mkt cap) i-securities Bursa Malaysia-i Bursa Suq Al-Sila Exchange Traded Bonds & Sukuk (ETBS) Sukuk Listing on Exempt Regime Sukuk Listing on Labuan International Financial Exchange (LFX) Listing Trading Clearing Settlement Depository As at 30 June 2018, the size of Malaysia s Islamic Capital Market is RM1.90 trillion (60.5% of total capital market size) 3

4 Demand for Shariah-compliant Investments The growing demand for Shariah-compliant investment is supported by increasing range of Islamic financial asset classes, resulting from affluent investors who are keen to invest in a Shariah-compliant manner, and Islamic investment opportunities accessible to institutional and non-muslim investors that wish to diversify their investments through Shariah-compliant instruments. PLCs/ Non-PLCs Investment Banks Fund Arrangers GLICs SPV Companies 4

5 Shariah-compliant Products Stay Away from Prohibited Elements RIBA (interest/usury) Excess or surplus charged over and above loan, a deferred price or debt Financial services based on riba (interest) GHARAR (contractual uncertainty) Uncertainties in contracts regarding contracting parties, subject matter, price etc. For justice & fairness - avoid future disputes among contracting parties Other non-permissible activities Conventional insurance MAYSIR (gambling) Element of exploitation Pure games of chance where one party gains at the expense of the loss to the another party e.g. gambling & gaming Non-halal food or related products Tobacco-related product or activities Entertainment that contradict to Shariah Share trading in Shariah non-compliant securities Other non-permissible activities 5

6 Shariah Screening Methodology Development of screening methodology to determine the Shariah compliance of securities traded on Bursa Malaysia Shariah compliance review is undertaken for securities of companies listed on the Exchange & during pre-initial public offering (IPO) companies Each public listed company is reviewed based on the latest annual audited financial statements For pre-ipo companies, the screening for Shariahcompliant status is made upon application (voluntary) The list of Shariah-compliant securities is updated and published every May and November To further build scale in the Shariah-compliant equity and investment management segments as well as expand the Islamic Capital Market s (ICM) international reach, ~ Capital Market Master Plan 2~ 6

7 Quantitative Assessment Activity-based Benchmarks Business Activities Conventional banking Conventional insurance Gambling Liquor and liquor-related activities Pork and pork-related activities Non-halal food and beverages Shariah non-compliant entertainment Tobacco and tobacco-related activities Interest income from conventional accounts and instruments Other activities deemed non-compliant according to Shariah Benchmark Ratio 5% Share trading Stockbroking business Rental received from Shariah non-compliant activities Other activities deemed non-compliant according to Shariah 20% 7

8 Financial Ratio Benchmarks 1 Cash Over Total Assets < 33% * Cash will only include cash placed in conventional accounts and instruments, whereas cash placed in Islamic accounts and instruments will be excluded from the calculation. 2 Debt Over Total Assets < 33% * Debt will only include interest-bearing debt whereas Islamic debt/ financing or sukuk will be excluded from the calculation. *Both ratios intend to measure Riba and Riba-based elements within a company s balance sheet. Qualitative Assessment Public perception, maslahah or image of the company s activities towards Islam. 8

9 Shariah Screening Process: New Listing & Semi-annual (May & November) 9

10 How the Screening is Done? Public Listed Companies Screening Process? Status Core Activity: Gambling Conventional banking Conventional insurance Manufacturing of liquor Other non-permissible activities NO Shariah noncompliant Core Activity: Construction Plantation Other permissible activities Subsidiaries Involved in: Tobacco Gambling Insurance Conventional banking YES How? Could be Shariah-compliant or otherwise 10

11 Example: Business Activity Attap Holdings Berhad Turnover Group Gaming RM 15 billion 1 billion Attap Plantations Berhad Attap Games Sdn Bhd Profit Before Tax RM Group 10 billion Gaming 0.3 billion Calculation Result Turnover RM1 bil/ RM15 bil = 7% 7% > 5% Non Shariah-compliant Profit Before Tax RM0.3 bil/ RM10 bil = 3% 3% < 5% Shariah-compliant 11

12 Treatment of Shariah Non-Compliant Securities Investment in Shariah-compliant securities, subsequently reclassified as Shariah non-compliant securities Investors to dispose their Shariah noncompliant securities within a month after the investors become aware that the status of a particular investment has been reclassified to be Shariah non-compliant. Investors should bear the responsibility to identify tainted income (made in the form of capital gain or dividend received during or after the disposal of the securities) and are encouraged to channel the tainted income to Baitulmal and/ or any approved charitable bodies. Investors are entitled to keep their original investment cost. 12

13 Shariah-compliant Securities 1 Indicator [S] on Bursa Malaysia Website 2 Shariah Mode on BURSAMKTPLC Portal List of Shariah-compliant Securities issued by Shariah 3 Symbol on Local Newspaper Advisory Council of Securities Commission Malaysia 4 13

14 Islamic Capital Market: Shariah Investing on Bursa Malaysia-i Section B: Shariah-compliant Equity Market Shariah-compliant Instruments i-stocks i-indices i-etfs i-reits ETBS 14

15 Shariah-compliant Instruments (as at July 2018) i-stocks i-indices i-etfs Total: 694 Main Market: 602 Construction 46 Consumer 101 Finance 2 Industrial 177 Infrastructure 3 Plantation 34 Properties 75 Technology 27 Trading/ Services 135 Hotel 1 ACE Market: 93 Construction 2 Industrial 17 Technology 50 Trading/ Services 19 Consumer 5 1. FTSE Bursa Malaysia EMAS Shariah Index 2. FTSE Bursa Malaysia Hijrah Shariah Index 3. FTSE Bursa Malaysia Small Cap Shariah Index 4. FTSE Bursa Malaysia MidS Cap Shariah Index ETBS 1. 1 st DanaInfra ETBS Stock Code: 0400GA 2. 2 nd DanaInfra ETBS Stock Code: 0400GB 3. 3 rd DanaInfra ETBS Stock Code: 0400GC 4. Sukuk Ihsan ETBS Stock Code: 0401GA 1. MyETF Dow Jones Islamic Market Malaysia Titans 25 (MyETF-DJIM 25) 2. MyETF MSCI Malaysia Islamic Dividend (MyETF-MMID) 3. MyETF MSCI South East Asia Islamic Dividend (MyETF-MSEAD) 4. MyETF Thomson Reuters Asia Pacific ex-japan Agribusiness (MyETF-AGRI) 5. Tradeplus Shariah Gold Tracker (GoldETF) 6. MyETF Dow Jones U.S. Titans 50 (MyETF-US50) i-reits 1. Al-Aqar KPJ REIT 2. AXIS REIT 3. KLCCP REIT 4. Al-Salam REIT 15

16 Shariah-compliant Equity Market Growth from 2010 to May 2018 Shariah Market Capitalisation Shariah ADV Bursa Malaysia-i ADV No. of Shariah PLCs + 45% + 77% RM74 mil 76% Shariah Market Capitalisation (RM bil) Growth of Shariah Market Capitalisation from 2010 to July % 1,400 1,200 1, % 1,044 1,028 1,104 1,154 1,161 1, July 2018 Shariah ADV (RM mil) Growth of ADV - OMT from 2010 to July % 2,000 1,500 1, % 1,629 1, ,088 1,042 1,269 1,331 1,285 1, July 2018 Bursa Malaysia-i ADV (RM mil) Performance since launch in September 2016 to July Dis-16 Jan-17 Feb-17 Mac-17 Apr-17 Mei-17 Jun-17 Jul-17 Ogos-17 Sept-17 Okt-17 Nov-17 Dis-17 Jan-18 Feb-18 Mac-18 Apr-18 Mei-18 June-18 July-18 16

17 Growth (%) Index Performance Growth (2010 to July 2018) Shariah indices have consistently outperformed the FBM KLCI 50% 40% 30% 20% 10% 0% -10% July-18-20% 17.5% FBM KLCI 27.4% FBM EMAS Shariah 1, , % FBM Hijrah Shariah 14, % FBM Small Cap Shariah 13, % FBM Mids Cap Shariah 14, % F4BGM 1, Source: Bursa Malaysia 17

18 Shariah-compliant Exchange Traded Funds (i-etf) What are i-etfs? i-etfs invest in a basket of Shariah-compliant stocks or instruments which track the performance of an index. i-etfs are listed and traded on Bursa Malaysia. 21 January 2008 MyETF Dow Jones Islamic Market Malaysia Titans 25 STOCK NAME : MyETF-DJIM 25 STOCK CODE: 0821EA 7 May 2015 MyETF MSCI South East Asia Islamic Dividend STOCK NAME : MyETF-MSEAD STOCK CODE: 0825EA 6 Dec 2017 Trade Plus Shariah Gold Tracker STOCK NAME : GOLDETF STOCK CODE: 0828EA 21 March 2014 MyETF MSCI Malaysia Islamic Dividend STOCK NAME: MyETF-MMID STOCK CODE: 0824EA 3 Dec 2015 MyETF Thomson Reuters Asia Pacific ex-japan Agribusiness STOCK NAME: MyETF-AGRI STOCK CODE: 0826EA 28 Feb 2018 MyETF Dow Jones US Titans 50 STOCK NAME: MyETF-US50 STOCK CODE: 0827EA Why invest in DIVERSIFICATION LOW COST TRADE LIKE STOCKS FULLY TRANSPARENT Gain exposure to a basket of securities in a single transaction Does not impose sales charge & has lower management fees Buy and sell anytime throughout the trading day The investment portfolio is fully transparent as it tracks an index 18

19 Shariah-compliant Real Estate Investment Trust (i-reit) What are i-reits? i-reits are funds or trusts that own and manage in come-producing Shariahcompliant commercial real estate (shopping complexes, hospitals, plantations, industrial properties, and office blocks). i-reit are listed and traded on Bursa Malaysia. i-reits are the easiest way to invest in large-scale real estate. STOCK NAME: ALAQAR STOCK CODE: 5116 Launched by KPJ Healthcare Bhd in 2006; World s first i-reit and hospital i-reit Properties: Hospitals, nursing colleges, commercial STOCK NAME: AXREITKOD STOCK CODE: 5106 Converted into Islamic in 2008 Properties: Offices, industrial, warehousing/ logistics, manufacturing facilities, hypermarkets STOCK NAME: KLCC STOCK CODE: 5235SS World s first Shariahcompliant Stapled Securities; ASEAN s 3rd largest REIT Properties: Offices, retail properties Why invest in i-reits? STOCK NAME: ALSREIT STOCK CODE: REIT launched Johor Corporation; Properties: Commercial retail, offices, industrial purposes AFFORDABLE STABLE INCOME STREAM HIGHLY LIQUID ASSETS EXPOSURE TO LARGE-SCALE REAL ESTATE 19

20 Exchange Traded Bonds & Sukuk (ETBS) What is ETBS? ETBS, also known as bonds or sukuk, are fixed income securities that are listed and traded on the stock exchange. ETBS are investment grade instruments which are aimed at tapping investors whose risk appetite tend to be more conservative and/or seeking diversity in the stock market. ETBS are issued either by companies or governments (the issuer) to raise funds for their requirements/ needs. 1 st ETBS Stock Code: 0400GA 2 nd ETBS Stock Code: 0400GB 3 rd ETBS Stock Code: 0400GC 4 th ETBS Stock Code: 0401GA Issuer Danainfra Nasional Berhad Issuer Danainfra Nasional Berhad Issuer Danainfra Nasional Berhad Issuer Ihsan Sukuk Berhad Listing Date 8 February 2013 Listing Date 28 November 2013 Listing Date 27 August 2014 Listing Date 8 August 2017 Maturity Date 8 February 2023 Maturity Date 31 October 2028 Maturity Date 23 July 2021 Maturity Date 8 August 2024 Tranche Value RM300 million Tranche Value RM100 million Tranche Value RM100 million Tranche Value RM5 million Tenure 10 years Tenure 15 years Tenure 7 years Tenure 7 years Yield 4% per annum Yield 4.58% per annum Yield 4.23% per annum Yield 4.60% per annum Why invest in FLEXIBILITY & EASE OF TRADING TRANSPARENCY DIVERSIFICATION ADDITIONAL INCOME STREAM ETBS are traded on Bursa Malaysia, making the buying & selling of ETBS as easy as trading in shares Access to realtime prices and volumes Diversify portfolio to include ETBS to complement investment A steady income through regular coupon/ dividend payments 20

21 Islamic Capital Market: Shariah Investing on Bursa Malaysia-i Section C: Shariah Investing on Bursa Malaysia-i 21

22 The Growth of Malaysian Islamic Funds Industry Malaysian Islamic Fund Assets Malaysia s Islamic funds industry has demonstrated impressive growth Institutions with Shariah Mandate (e.g. EPF, TH, KWAP, PRS) 21 Islamic Fund Management Companies & 31 FMCs with Islamic Window Shariah Funds (Mar 2018: Islamic AUM RM164 billion 21% to total industry) SHARIAH INVESTING Shariah Unit Trust Funds (April 2018: NAV RM77.8 billion 18% to total industry) Retail Shariah RM billion Mar 2018 Islamic AUM Total Fund Mgmt Industry % Islamic AUM to Total Industry % 15.2% 15.8% 16.6% 17.6% 19.8% 21.5% 22.0% 21.2% #YnotIF Note: Islamic AUM comprises AUM of IFMCs and Islamic Windows Data includes assets that are sourced from collective investment schemes and private mandates Source: Securities Commission Malaysia 22

23 World s First End-to-End Shariah Investing Platform launched on 5 September 2016 World s First End-To-End Shariah-compliant Investing Platform Holistic approach in Shariah investment Continuous efforts and support from Islamic Finance ecosystem 14 Islamic Participating Organisations (1 Full-fledged; 13 Window) 52 Islamic Fund Management Companies (21 Full-fledged; 31 Window) 16 Islamic Banks (local & foreign) 11 Takaful (Islamic Insurance) Companies 23

24 New Landscape for Investors Seeking Shariah-compliant Securities 24

25 Call to Action: Shariah Investing on Bursa Malaysia-i 25

26 Thank You Live Responsibly Invest Responsibly Invest Shariah Islamic Capital Market, DISCLAIMER: Bursa Malaysia and its Group of Companies (the Company) reserve all proprietary rights to the contents of this presentation. Whilst the company endeavors to ensure that the contents in this presentation are accurate, complete or have been obtained from sources believed by the Company to be accurate and reliable, neither the Company nor the presenter make any warranty, express or implied, nor assume any legal liability or responsibility for the accuracy, completeness or currency of the contents of this presentation. In no event shall the Company be liable for any claim, howsoever arising, out of or in relation to this presentation. Copyright Bursa Malaysia Berhad 2017 (30632-P)

27 CONTACT INFORMATION NOORSURIANI MUHAMED Vice President, Product & Market Development MOHD FUZAIMI IRWAN ZUBIR Senior Manager, Product & Market Development NIKITA ANG ALBERT ANG ABDULLAH Executive, Product & Market Development SITI NUR SYAWALIA ADAM Executive, Product & Market Development NUR SYAZWANI OMAR Executive, Product & Market Development DISCLAIMER: Bursa Malaysia and its Group of Companies (the Company) reserve all proprietary rights to the contents of this presentation. Whilst the company endeavors to ensure that the contents in this presentation are accurate, complete or have been obtained from sources believed by the Company to be accurate and reliable, neither the Company nor the presenter make any warranty, express or implied, nor assume any legal liability or responsibility for the accuracy, completeness or currency of the contents of this presentation. In no event shall the Company be liable for any claim, howsoever arising, out of or in relation to this presentation. Copyright Bursa Malaysia Berhad 2017 (30632-P)