ISLAMIC CAPITAL MARKET€¦ · offering diverse Shariah compliant products. Our Bursa Suq Al-Sila’(“BSAS”)is a commodity trading platform specifically dedicated to facilitate

ISLAMIC CAPITAL MARKET

Shariah Investing on

Presentation by:

Jamaluddin Nor Mohamad

17 April 2017

Topics

2

PART 1

PART 2

PART 3

PART 4

OVERVIEW OF ISLAMIC CAPITAL MARKET

PART 1

Bursa Malaysia: An Integrated Exchange

4

We operate the stock market

in Malaysia where investors

can participate in the buying

and selling of shares on two

types of markets, the Main

Market and the ACE Market.

TWO TYPES OF MARKETS:

Main Market: 787 cos

ACE Market: 113 cos

• 18 Sectors that cover 60

economic activities

• Total Market Cap:

RM 1.80 trillion

PRODUCTS:

• 644 Structured Warrants

• 57 Warrants

• 16 REITs

• 10 Foreign Listings

• 8 ETFs

• 4 SPACs

• 1 Stapled Securities

• 1 Closed-End Fund

We offer 12 derivatives

products comprising

commodity, equity and

financial futures and options.

12 DERIVATIVES PRODUCTS:

5 Commodity Futures:

• FCPO

• FUPO

• FPKO

• FGLD

• FPOL

3 Financial Futures:

• FMG3

• FMG5

• FKB3

2 Equity Futures:

• FKLI

• SSFs

1 Commodity Options:

• OCPO

1 Equity Options:

• OKLI

As a leading Islamic capital

market, we operate a market

offering diverse Shariah

compliant products. Our

Bursa Suq Al-Sila’ (“BSAS”) is

a commodity trading platform

specifically dedicated to

facilitate Islamic liquidity

management. We have 24

Sukuk Listings valued at

USD$54 billion.

OTHER SHARIAH COMPLIANT

OFFERINGS INCLUDE:

• 670 i-Stocks

• 4 i-ETFs

• 4 i-REITs

• 3 ETBS

• 2 i-SPACs

We operate the Labuan

International Financial

Exchange, where issuers can

list their non-Ringgit

securities.

TOTAL MARKET CAP:

USD$27 billion

• 22 Bond Listings

• 11 Sukuk Listings

Listing Trading DepositorySettlementClearing

Bursa Malaysia: An Integrated Exchange

5

Islamic AUM, 20%

(RM138.5 bil)

Conventional AUM,80%

(RM537.8 bil)

Shariah Equities,

63%(RM1,050.0 bil)

Non-Shariah Equities,

37%(RM617.4 bil)

As at 31 December 2016, the size of

Malaysia’s Islamic Capital Market is

RM1.67 trillion as at June 2016

as at June 2016

as at June 2016

as at June 2016

as at Dec 2016

as at Dec 2016

SukukMarket,

55%(RM637.3 bil)

Bond Market,42%

(RM496.0 bil)

How Bursa Malaysia plays its role in the Islamic capital market

Malaysian Islamic Capital Market: In 1990s

6

1990

1993

1994

1995

1996

1997

1998

1999

The history began and created strong fundamental…


7

The history evolved…

2001

20002002

2007

2009

2005

2006

2008


8

And the achievement continues…

2011

2012

2013

2014

2015

2016

SHARIAH-COMPLIANT PRODUCT OFFERINGS

PART 2

Shariah-compliant Products

10

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

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

Other

non-permissible

activities

Conventional

insurance

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

Stays away from prohibited elements

Al-Quran mentions about

prohibition of Riba:

“And Allah has permitted

sale (trade) and prohibited

Riba (usury)”

[Al-Baqarah 2: 275]


prohibition of Gharar:

“O you who believe! Eat not

up your property among

yourselves unjustly by

falsehood and deception,

except it be a trade

amongst you, by mutual

consent”

[Al-Nisa 4:29]


prohibition of gambling:

“They ask thee

concerning wine and

gambling. Say: in them is

the great sin and some

profits from men, the

sin is greater than the

profits

[Al-Baqarah: 219]

Shariah-compliant Product Offerings

11

Readily available integrated end-to-end infrastructure for issuers and

investors seeking Shariah-compliant instruments

PLCs/

Non-PLCs

Investment

Banks

Fund

Arrangers

GLICs

SPV

Companies

Government

Securities Screening Methodology

12

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

Pre-Revision

(since establishment in 1995)

For pre-IPO companies, the screening for Shariah-

compliant status is made upon application

(voluntary)

The list of Shariah-compliant securities is updated

and published every May and November

Post Revision

(Effective from November 2013)

4 activity-based benchmarks

<5%; <10%; <20%; <25%

Quantitative Assessment

Qualitative Assessment

Public perception or image

Image of the company’s activities

Two-tier quantitative approach:

Activity-based benchmarks

• 2 activity-based benchmarks

<5%; <20%

Financial ratio benchmarks (<33%)

• Cash Over Total Assets

• Debt Over Total Assets

Quantitative Assessment


Public perception or image

Image of the company’s activities

“…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~

How the Screening is Done?

13

Public Listed Companies

Core Activity:

• Gambling

• Conventional banking

• Conventional insurance

• Manufacturing of liquor

• Other non-permissible

activities

Core Activity:

• Construction

• Plantation

• Other permissible activities

Subsidiaries Involved in:

• Tobacco

• Gambling

• Insurance

• Conventional banking

Screening Process?

NO

YES

Shariah non-

compliant

Could be

Shariah-compliant

or otherwise

How?

Status

Activity-based Benchmarks

14

Benchmark

Ratio

5%

20%

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

Interest income from conventional accounts and instruments

Tobacco and tobacco-related activities

Other activities deemed non-compliant according to Shariah

Hotel and resort operations

Share trading

Stockbroking business

Rental received from Shariah non-compliant activities

Other activities deemed non-compliant according to Shariah

Financial Ratio Benchmarks

15

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.

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.


Public perception, maslahah or image of the company’s activities

towards Islam.

1

2

Shariah-compliant Instruments i-Stocks

i-Indices

i-ETFs

i-REITs

___________________________________

EQUITIES MARKET

Islamic Capital Market Statistics

17

849(88.1%)

837(88.7%)

819(88.3%)

652(71.3%)

685(75.6%)

667(73.9%)

671(74.2%)

670(74.4%)

2010 2011 2012 2013 2014 2015 2016 Mar2017

Number of Shariah PLCs

No. of Shariah PLCs No. of PLCs

964

964964

The Shariah-compliant regime getting stronger

2010 2011 2012 2013 2014 2015 2016YTD Mar

2017

Total Market Capitalisation –

Shariah (RM bil)

803.2

(63.8%)

809.6

(63.7%)

945.9

(65.2%)

1,044

(62.1%)

1,028

(63.0%)1,104

(65.8%)

1,050

(63.0%)

1,123

(62.4%)

Total ADV OMT – Shariah

(RM mil)

918

(66.7%)

1,088

(68.0%)

1,042

(69.8%)

1,269

(69.7%)

1,331

(68.6%)1,285

(68.3%)

1,142

(63.0%)

1,438

(60.5%)

Total ADV OMT+DBT – Shariah

(RM mil)

994

(66.6%)

1,134

(67.3%)

1,106

(69.9%)

1,453

(71.2%)

1,396

(68.3%)1,348

(68.4%)

1,253

(63.7%)

1,531

(60.4%)

Total Number of Shariah-

compliant PLCs

849

(88.1%)

837

(88.7%)

819

(88.3%)

652

(71.3%)

685

(75.6%)667

(73.9%)

671

(74.2%)

670

(74.4%)

Total Number of Shariah-

compliant Counters (PLCs +

REITS + ETBS + ETFs)

846

(86.7%)

837

(87.1%)

817

(86.7%)

657

(70.2%)

693

(73.3%)678

(73.8%)

682

(74.1%)

681

(74.3%)

944927

915 906 903

Source: Bursa Malaysia

Jun 2016 Dec 2016 Feb 2017 Mar 2017

Stocks 669 671 671 670

Indices 3 3 3 3

ETFs 4 4 4 4

REITs 4 4 4 4

ETBS 3 3 3 3

Number of Shariah Instruments

903 901

918 1,088 1,042

1,269 1,331 1,285 1,142

-

500

1,000

1,500

2010 2011 2012 2013 2014 2015 201618

Islamic Capital Market Growth from 2010 through 2016

ADV - OMT

+

24%

Velocity

27%

No. of Shariah PLCs

74.2%

Market

Capitalisation

(RM mil)Growth of

Market Capitalisation

from 2010 to 2016

+31%

803 810 946

1,044 1,028 1,104 1,050

-

200

400

600

800

1,000

1,200

2010 2011 2012 2013 2014 2015 2016

ADV – OMT

(RM mil)Growth of ADV - OMT

from 2010 to 2016

+24%

+24%

FBM Hijrah

Shariah IndexPerformance

from 2010 to 2016

10,457 11,023 12,675 14,324 14,469

13,904 13,428

-

5,000

10,000

15,000

20,000

2010 2011 2012 2013 2014 2015 2016

+5.41%

31%

+

Market Capitalisation

+14.99%+13.01% +1.01% -0.94%

Islamic Capital Market 2016 Highlights

-3.42%

19

Shariah-compliant Instruments

i-Stocks i-Indices i-ETFs

i-REITS

ETBS

Total: 670

Main Market: 588

Construction 41

Consumer 100

Finance 2

Industrial 171

Infrastructure 4

Plantation 33

Properties 75

Technology 25

Trading/ Services 137

ACE Market: 82

Construction 3

Industrial 16

Properties 47

Trading/ Services 16

1. FTSE Bursa Malaysia

EMAS Shariah Index


Hijrah Shariah Index


Small Cap Shariah Index

1. 1st DanaInfra ETBS

Stock Code: 0400GA

2. 2nd DanaInfra ETBS

Stock Code: 0400GB

3. 3rd DanaInfra ETBS

Stock Code: 0400GC

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)

1. Al-Aqar KPJ REIT

2. AXIS REIT

3. KLCCP REIT

4. Al-Salam REIT

FTSE Bursa Malaysia Index Series Design

Large Cap

70%

Mid Cap

20%

Small Cap

10%

FTSE Bursa

Malaysia KLCI

FTSE Bursa

Malaysia Mid 70

FTSE Bursa

Malaysia Small

Cap

FTSE Bursa

Malaysia Top 100

FTSE Bursa

Malaysia EMAS

98%*

FTSE Bursa Malaysia Fledgling 2%*

Constituent numbers are as of Dec 2016.

*Based on full market capitalisation

FTSE Bursa

Malaysia EMAS

Shariah

FTSE Bursa

Malaysia Hijrah

Shariah

FTSE Bursa

Malaysia Palm Oil

Plantation

Main

Mark

et

FTSE Bursa Malaysia ACE

FTSE Bursa Malaysia Asian Palm Oil PlantationDeveloped, advanced emerging and secondary emerging as classified by

FTSE in the Asia Pacific region ex Japan, Australia, New Zealand

AC

E

Mark

et

FTSE Bursa

Malaysia Small Cap

Shariah

FTSE4Good Bursa

Malaysia

100

30

70

155 255

195

9

38

30

385

111

18

129

Shariah Indices

FTSE Bursa Malaysia EMAS Shariah Index

FTSE Bursa Malaysia Hijrah Shariah Index

FTSE Bursa Malaysia Small Cap Shariah Index

Review Dates

Semi-annually in June and December

Source: FTSE 21

21

Index Performance & Growth

Source: Bursa Malaysia

0%

10%

20%

30%

40%

50%

60%

2010 2011 2012 2013 2014 2015 2016 YTD Mar 2017

Growth Percentage (%)

FBM KLCI FBM Emas Shariah FBM Hijrah Shariah FBM Small Cap Shariah

Index

Year-end

2010 2011 2012 2013 2014 2015 2016 YTD Mar 2017

FBM KLCI 1,518.911,530.73

(0.78%)

1,688.95

(11.19%)

1,866.96

(22.91%)

1,761.25

(15.95%)

1,692.51

(11.43%)

1,641.73

(8.09%)

1,740.09

(14.56%)

FBM Emas

Shariah10,058.15

10,300.29

(2.41%)

11,520.73

(14.54%)

13,051.59

(29.76%)

12,507.02

(24.35%)

12,800.65

(27.27%)

12,014.42

(19.45%)

12,811.34

(27.37%)

FBM

Hijrah

Shariah10,456.86

11,022.63

(5.41%)

12,674.93

(21.21%)

14,323.63

(36.98%)

14,468.70

(38.37%)

14,332.58

(37.06%)

13,427.77

(28.41%)

14,101.96

(34.86%)

FBM

Small Cap

Shariah- - 10,482.56

14,645.47

(39.71%)

13,870.23

(32.32%)

15,189.63

(44.90%)

13,759.07

(31.26%)

16,010.22

(52.73%)

Shariah indices have consistently outperformed the FBM KLCI

22

21 January 2008

Listing of MyETF Dow Jones Islamic Market

Malaysia Titans 25 (MyETF-DJIM 25)

21 March 2014

Listing of MyETFMSCI Malaysia

Islamic Dividend (MyETF-MMID)

7 May 2015

Listing of MyETF MSCI South East Asia Islamic

Dividend (MyETF-MSEAD)

Shariah-compliant ETFs (i-ETFs)

3 December 2015Listing of MyETF Thomson

Reuters Asia Pacific

ex-Japan Agribusiness

(MyETF-AGRI)

Listing of

MyETF-DJIM 25

MyETF-MMID

NAV (March 2017) RM305.53 mil


MyETF-MSEAD


MyETF-AGRI


Efficient way to diversify

23

Shariah-compliant REITs (i-REITs)

The Easiest Way to Invest in Large-scale Real Estate

Launched by KPJ Healthcare

Bhd in 2006;

World’s first i-REIT and

hospital i-REIT

Properties: Hospitals, nursing

colleges, commercial

Converted into Islamic in 2008;

Office and industrial properties

Properties: Offices, industrial,

warehousing/ logistics, manufacturing

facilities, hypermarkets

World’s first Shariah-compliant

Stapled Securities;

ASEAN’s 3rd largest REIT

Properties: Offices, retail

properties

Launched & listed

in September 2015;

Properties: Commercial retail,

offices, industrial purposes

EXCHANGE TRADED

BONDS & SUKUK

(ETBS)

___________________________________

ETBS: An Introduction

25

Bonds in the past have only been available to institutions and high net

worth individuals (HNWI). Bursa has brought this product into the

exchange to enable retail to access.

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.ETBS utilizes the same

mechanism as that of buying

and selling shares, in which

each investor needs to have

a trading account (with the

broker) and a Central

Depository System (CDS)

account.Investment Banks/

Securities Firms/

BanksInvestors/ Traders

Exchange

What is ETBS?

A New Asset Class Launched in January 2013

2626

Maiden Issuance by DanaInfra Nasional Berhad in February 2013 under its

RM21.0 billion Islamic Medium Term Note Sukuk Murabahah Programme for

the nation’s MRT Project1st ETBS – Stock Code: 0400GA

Listing Date 8 February 2013

Maturity Date 8 February 2023

Tranche Value RM300 million

Tenure 10 years

Yield 4% p.a

Subscription Rate 161%

2nd ETBS – Stock Code: 0400GB

Listing Date 28 November 2013

Maturity Date 31 October 2028


Tenure 15 years

Yield 4.58% p.a

Subscription Rate 219%

3rd ETBS – Stock Code: 0400GC

Listing Date 27 August 2014

Maturity Date 23 July 2021


Tenure 7 years

Yield 4.23% p.a

Subscription Rate 103.95%

Volume, Value and Closing Price as at 31 January 2017 (12-month)

SHARIAH INVESTING ON BURSA MALAYSIA-I

PART 3

Maqasid Shariah

28

Shariah Index of Malaysia

Legal PoliticsEconomy

Education Health CultureInfra & Environ.

Social

Maqasid Shariah

Faith Self Intellect Posterity Wealth

Protecting

Malaysia Shariah Index (ISM) is the world’s first ever Shariah Index - was

introduced in February 2015 as a benchmark to determine a country’s

fulfillment in the objectives of Shariah principles

ISM Report 2015:

Malaysia scored 75.42% (categorised as “Very Good”)

87.19% 79.19%

65.27%

82.50% 73.92% 66.47% 62.39% 68.52%

The Growth of Malaysian Islamic Funds Industry

29

Malaysia’s Islamic funds industry hasdemonstrated impressive growth

RM billion 2010 2011 2012 2013 2014 2015 2016

Islamic AUM 48.0 64.2 79.6 97.5 110.6 132.4 149.6

Total Fund

Management

Industry

377.0 423.3 505.1 588.4 629.9 667.9 676.3

% Islamic

AUM to Total

Industry

12.7% 15.2% 15.8% 16.6% 17.6% 19.8% 21.5%

Source: Securities Commission Malaysia

Note:

Islamic AUM comprises AUM of IFMCs and Islamic Windows

Data includes assets that are sourced from collective

investment schemes and private mandates

Malaysian Islamic Fund Assets

#YnotIF

20 Islamic Fund Management Companies

(6 of the top global IFMCs are from

Malaysia)

Shariah

Unit Trust

Funds

(2016: NAV RM60.9 billion – 17.0% to total industry)

Retail Shariah

Shariah

Funds

(2016:

Islamic AUM RM149.6 billion –

21.5% to total industry)

Shariah Mandate

(e.g. EPF, TH, KWAP, PRS)

Best

Practices

for Shariah

Investing

Global Islamic Funds Statistics

Malaysia is the highest in the Global Islamic Assets under Management

(AUM)

30

31

Global Islamic Finance Assets Outlook

IFDI expects that total global Islamic finance assets will reach USD3.5 trillion by

2021 as a result of continued growth in all sectors globally.

Islamic banking will likely be the main driver of growth reaching USD2.8 trillion

in assets by 2021, with its share increasing to 80% by 2021 from 73% in 2015.

Total projected growth will be supported by Islamic banking and other sectors in

the GCC region and other top performing countries in Islamic finance, along with

the rumoured or planned development of Islamic finance in other countries.

Source: ICD-Thomson Reuters Islamic Finance Development Report 2016

Islamic Capital Market Aspiration

32

Staying RelevantTo further develop Islamic Capital Market

& Bursa Malaysia in becoming

a vibrant trading centre for

Islamic-based financial offerings

Leveraging StrengthTo enhance Bursa Malaysia’s

Shariah-compliant product &

services offerings’ visibility

in domestic & global market

New FrontierTo expand Bursa Malaysia’s

domestic & foreign

client base

The Leading Centre of the Islamic Capital Market

World’s first fully integrated

Shariah Investing on

World’s First End-to-End Shariah Investing

Platform launched on 5 September 2016

33

Previous Landscape for Investors Seeking

Shariah-compliant Securities

34

The “First-In-The-World End-to-End

Shariah Investing Platform”

35

Participating

OrganisationsListing Trading Depository Settlement

Full-Fledged &

With Islamic Window

Bursa Trade Securities 2

(BTS2)

Equity

Clearing

System (ECS)

Central

Depository

System (CDS)

Clearing

Islamic

Financial

Institutions

Our Marketplace Advantage:

Bursa Malaysia’s fully integrated end-to-end exchange-related facilities will

create a conducive marketplace for Shariah investing

Robust regulatory, supervisory, Shariah and legal framework

Product breadth and depth, attractive to global investors and issuers

Diverse players with global capabilities and connectivity for business deals

Malaysia’s Comprehensive Islamic Finance Eco-system Would Help

Facilitate the Growth of the Malaysian Islamic Capital Market

Efficient and transparent

price discovery platform

Deep primary market

and active secondary

trading of instruments

Efficient system that provides one-stop

clearing, settlement and depository

services

Leveraging on IFIs for final settlement

for full-fledged Islamic transactions

1 full-fledged

Islamic PO

8 POs with

Islamic window

Resolution of the Shariah Advisory Council of

Securities Commission Malaysia

36

The general concept and framework of the

proposed Shariah Investing on Bursa Malaysia

The “Best Practices in Islamic Stockbroking

Services Undertaken by Participating

Organisations”

The “Best Practices for Shariah Investing”

The Shariah Advisory Council of the Securities Commission

Malaysia (SAC) had at its 185th meeting held on 19 May 2016

resolved that the SAC has no objection to the following:

New Landscape for Investors Seeking

Shariah-compliant Securities

37

38

Islamic Participating Organisations

List of Islamic POs

Pre Bursa Malaysia-i Launch:

1.

2.

3.

4.

5.

6.

7.

8.

9.

BIMB Securities Sdn Bhd (19 August 1994) ~ Full-fledged

Affin Hwang Investment Bank Berhad (12 February 2004)

AmInvestment Bank Berhad (21 August 2008)

CIMB Investment Bank Berhad (21 August 2008)

Jupiter Securities Sdn Bhd (21 January 2011)

Kenanga Investment Bank Berhad (26 August 2014)

Malacca Securities Sdn Bhd (21 June 2016)

Maybank Investment Bank Berhad (4 May 2010)

RHB Investment Bank Berhad (26 August 2014)

Post Bursa Malaysia-i Launch:

1.

2.

Hong Leong Investment Bank Berhad (15 September 2016)

TA Securities Sdn Bhd (23 December 2016)

39

Best Practices in Islamic Stockbroking Services

Undertaken by POs

Background of Islamic Stockbroking Services

Best Practices of Islamic Stockbroking Services

‘Best Practices in Islamic Stockbroking Services Undertaken by Participating Organisations’

endorsed by Shariah Advisory Council of Securities Commission Malaysia on 19 May 2016

Comply with Shariah principles

Deal in Shariah-compliant securities

Facilitate the disposal of Shariah

non-compliant securities upon

reclassification of Shariah-compliant

securities as Shariah non-compliant

following the review by the SAC of

SC.

Human Resources – Qualification, Expertise and Experience

Compliance with Shariah Principles, Concepts and Rulings issued by SAC of SC

Shariah Adviser

Supervision of Islamic PO

Compliance of Operations, Systems and Procedures

Audit

Compliance Functions

Shariah Confirmation

Board of Directors

Transparency

Memorandum & Articles of Association

Advertisement

Takaful / Insurance

40

Best Practices for Shariah Investing

Shariah Compliance Assurance Framework

41

Shariah Compliance Assurance Framework (SCAF)

Shariah Committee

Shariah Compliance Assurance Committee (SCAC)

Best Practices in Islamic Stockbroking Services Undertaken by Participating Organisations

Best Practices for Shariah Investing

Shariah Audit Regulation TreasuryRisk &

Compliance

What is in for Islamic Capital Market Industry?

42

Strengthen Islamic capital market product and service

offerings

Make Shariah trading more visible and provide a conducive

marketplace for Shariah investing community

Increase in demand for Shariah investments by investors

who seek to enhance their compliance by undertaking

investing process in a full Shariah-compliant manner

Attract domestic, regional and global Islamic and ethical

issuers and investors, and boost cross border activities

Malaysia: THE MARKETPLACE for Islamic-based financial

offerings and Shariah investing

SUSTAINABLE & RESPONSIBLE INVESTING

PART 4

Ethical Investment vs Shariah Investment

44

Quantitative Assessment:

Business activity benchmark

Financial ratio benchmark


Shariah Investment

Shariah advisor advises on quarterly/ semi-

annually review, as well as in day-to-day

fund operation

Steer clear of alcohol, tobacco, gambling and

entertainment

Guided by Al-Quran and Sunnah

Maqasid al-Shariah

Protection of faith

Protection of life

Protection of posterity

Protection of property

Protection of reason

Advocates bridging of the financial sector

with the real economy through trading,

leasing and equity participation

Mudharabah & Musharakah

Stays away from speculation

Hedging is nonetheless permissible for risk

sharing purposes

Negative screening

Positive screening

Engagement

May not always have a formal

advisor.

Steer clear of alcohol, tobacco,

gambling and entertainment

Does not adhere to a fixed set

of guidelines

Advocates socially responsible

business practice

Stays away from speculation

Ethical Investment

Screening

Methodology

Fund Advisor

Common Values

Guideline

Financial

Inclusion

Non-speculative

ASEAN’s First Globally Benchmarked ESG Index:

Complementing Shariah-compliant Investing

45

Launch of the FTSE4Good Bursa Malaysia (F4GBM) Index to measure the

performance of companies demonstrating strong ESG practices, to further

strengthen the governance & sustainability framework for Malaysian

equities. The index is aligned with other leading global ESG frameworks

such as Global Reporting Initiatives and the Carbon Disclosure Project.

27 out of 42 (64%) of the FTSE4Good Bursa Malaysia

Index Constituents are Shariah-compliant

46

The 15 Shariah non-compliant companies are due to their nature of business

Note: The constituents list was last updated on 6 Dec 2016

* New addition to the Index for Dec 2016 review, with effect from Monday, 19 Dec 2016

# Lafarge Malaysia & Media Prima were excluded in Dec 2016 review due to their deletions from the FTSE Bursa Malaysia EMAS Index

Catalysing Shariah Investing on Bursa Malaysia-i

47

1. The need for comprehensive support from the industry and stakeholders.

2. Embracement by domestic market will be major catalyst to drive foreign

interest.

DISCLAIMER :

Bursa Malaysia and its Group of Companies (the Company) reserve all proprietary rights to the contents of this presentation. Whilst the Company

endeavours 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."

© Bursa Malaysia 2013

http://www.bursamalaysia.com/market/islamic-markets/

Live Responsibly

Invest Responsibly

Invest Shariah

Thank You

[email protected]

Islamic Capital Market, Bursa Malaysia

@ICM_Bursa

@ICM_Bursa

Documents

ISLAMIC CAPITAL MARKET€¦ · offering diverse Shariah compliant products. Our Bursa Suq Al-Sila’(“BSAS”)is a commodity trading platform specifically dedicated to facilitate