SC sees good year ahead for sukuk

The regulator saw ‘a stream of new applications’ from January to March


Malaysia could see more Islamic capital market funds raised this year as sukuk activity has picked up in the first quarter of 2019, according to Securities Commission Malaysia (SC) deputy CEO Datuk Zainal Izlan Zainal Abidin (picture).

He said while it may be early to predict how the domestic sukuk market will perform this year, the regulator saw “a stream of new applications” coming in from January to March.

“Hopefully, (these applications) will follow with issuances soon. I think there are still requirements for fundraising in the market and therefore, we do see these sukuk issuances picking up over last year’s level.

“Global conditions are still quite volatile, so it’s too early to say whether it will be better than last year or not…but we are cautiously optimistic that it should be a fairly good year for fundraising,” he told reporters at the SC-World Bank-International Organisation of Securities Commissions Asia Pacific Hub Conference 2019 in Kuala Lumpur yesterday.

“Also, with some of the larger projects that could potentially be initiated soon, perhaps there will be demand or requirement for sukuk issuances. However, we’re not seeing anything specific at the moment particularly from the larger projects,” Zainal said.

The government recently announced the revival of the East Coast Rail Link and the Bandar Malaysia projects, brightening investor sentiment which has been dampened of late due to concerns over slowing economic growth, poor corporate earnings and a lack of clarity on government policies. According to SC data, Malaysia’s Islamic capital market was valued at RM1.88 trillion or 61% of the nation’s overall capital market as at end-2018, down from RM1.9 trillion the year prior.

Malaysia is the world’s largest sukuk issuer, having accounted for 51.6% of global outstanding sukuk as at endJune 2018, according to estimates from the Malaysia International Islamic Financial Centre.