Forging new markets
Akmal Hassan, chief executive officer and executive director of AIIMAN
Akmal Hassan, chief executive officer and executive director of Asian Islamic Investment Management Sdn Bhd (AIIMAN) opined that the key principles in Islamic finance (such as ethical, transparent as well as prohibition of excessive risk, leverage and speculation) appealed to many investors.
In addition, rising affluence and middle class population in the emerging markets in Asia contributed to the growth in Islamic asset management industry due to growing disposal income and rising awareness for wealth management services, he added.
AIIMAN is one of Malaysia’s fastest growing independent Islamic fund management companies, being the outsourcing company that Hwang Investment Management Bhd has entrusted with the management of the former’s syariah compliant assets.
Its areas of expertise include investment advisory, asset and fund management services, managing Asian syariah compliant equities, global sukuk (Islamic bond) and ‘morabaha’, as well as structured products.
“Since its inception in 2008, AIIMAN has been doubling its assets under management and now boasts an impressive RM5.26 billion as at September 30 this year.
“We have seen a spectacular growth in Islamic finance in the recent years, especially so post- 2008.
ROBUST GROWTH: Securities Commission then chairperson Tan Sri Zarinah Anwar is seen at the launch of AIIMAN in 2008. AIIMAN’s success is largely due to its investment performance and low volatility that add to the appeal of the products, according to Akmal.
GLOBAL EXPANSION: On the government’s plan to make Malaysia an international Islamic financing hub by the year 2020, Abdul Rani emphasises the need for the Islamic banking segment to grow beyond Malaysia’s domestic market and venture into the global arena.
EXTENSIVE NETWORK: Photo shows the launch of OUIMB’s Global Food Islamic Equity Fund. Despite being an investment bank, OSKIB has an extensive branch networks with more than 80 branches and regional offices throughout Malaysia, Indonesia, Singapore, Cambodia, Thailand, Hong Kong and China, says Yazit.
However, it is not so much of investor switching over from conventional to Islamic assets, but more so the case that Islamic investment products are growing its own market segment.
“In other words, the growth is not at the expense of the conventional counterpart, but due to rapid acceptance of Islamic investment products not only from the Muslim community in Malaysia, but also from the non-Muslim community as well.
“In AIIMAN’s case, it is largely due to its investment performance and low volatility that add to the appeal of the products.
“Given the low growth, low interest rate and ample liquidity economic environment, defensive investment strategy will continue to do well.
“As such, we expect dividend and income yielding investments with low volatility will be favoured by investors,” he opined.
Among AIIMAN’s funds is Hwang AIIMAN Growth Fund (AGF), an award winning syariah compliant retail equity fund which since inception 10 years ago, has charted strong long-term returns.
According to figures furnished by AIIMAN, investors who had remained invested since AGF’s inception would have seen a capital growth of 284.16 per cent as at September 30 this year.
The fund valued at RM89.6 million also has been consistently distributing income although its primary objective is providing capital growth.
Hwang AIIMAN A20 China Access (A20) is the world’s first syariah compliant fund which provides exposure to the 20 largest China’s A-share companies that are listed in Shanghai and Shenzen stock exchanges.
The fund is suitable for investors who believe in the long-term growth story of China and want a more direct access to China’s booming economic growth, according to AIIMAN.
Yazit Yusuf, OSKIB Islamic banking division director and head
Meanwhile, OSK Investment Bank Bhd’s (OSKIB) Islamic banking division director and head Yazit Yusuff believed that the Malaysian experience in Islamic banking was still fairly new and encouraging.
He opined that it should remain buoyant in the coming years with opportunities for OSKIB to venture into the existing domestic Islamic financial market as well as the regional and international levels.
Yazit explained that the setting up of the Islamic banking and Islamic fund management business units within OSKIB was to complement the bank’s product offerings.
“In the continuous effort to realise the bank’s vision as a leading investment bank in the region, it is critical that the bank offers wholesome value proposition which includes the various Islamic finance activities that have been registering double digit growth since early 1990s.
“From the very beginning, the intention of the management in setting up the Islamic banking segment was to grow new markets and to reach out to segments of clients whom the bank was not able to serve earlier.
“These client segments include Islamic banks, takaful companies, government link investment corporations like Tabung Haji, Islamic fund and asset management companies.
“Furthermore, with the direction by the government to encourage its various departments and agencies to support the Islamic finance industry, the bank could lose existing loyal clients in the absence of syariah compliant products and services.
“Our Islamic banking business targets a different client segment then that of our conventional counterpart.
Despite this emphasis, the Islamic banking segment has continued to grow steadily.”
He noted that OSKIB had the potential to further grow its Islamic banking business by leveraging on its nationwide and regional presence given that the bank currently has more than 50 domestic branches throughout the country including in East Malaysia and subsidiaries in Hong Kong, Singapore, Indonesia, Cambodia and China.
“The bank, through its Debt Capital Market (DCM) division is also an active player in the Islamic capital market, as adviser and arranger for the issuance of Islamic Commercial Papers (ICP) and Islamic Medium Term Notes (IMTN) either in ringgit or foreign currency.”
He elaborated further by noting that to date, the Islamic banking window had managed to grow ringgit deposits from non-retails clients (including corporate, federal and state government funds, government linked companies, fund management companies and other corporations) from RM453 million in the first year of operation in 2008 to RM1.186 billion as at end of last year.
SIGNIFICANT CONTRIBUTION: The Islamic finance sector’s contribution to the overall sector is expected be at about 40 per cent by the year 2020. — Reuters photo
In addition, total assets had grown from RM505.9 million in 2008 to RM1.327 billion as at December 2011, he added.
Furthermore, OSKIB’s subsidiary OSK-UOB Investment Management Bhd (OUIMB) had also seen encouraging growth in its syariah compliant funds.
An example was the OSK-UOB Dana Islam (launched 2001) with a current net asset value (NAV) of RM5.02 million.
When asked about the con- tributory factors to the growth trend, Yazit told BizHive Weekly, “The management has been very supportive for all the initiatives proposed to grow the Islamic finance businesses be it from the banking segment, capital market or fund management services.
“It is an agenda that the bank will continue to strive and develop not only in Malaysia but also in countries that the bank currently has presence.
Despite being an investment bank, OSKIB has an extensive branch networks with more than 80 branches and regional offices throughout Malaysia, Indonesia, Singapore, Cambodia, Thailand, Hong Kong and China.” In addition, he also cited the tremendous efforts and support from all the staff of the bank, not only from those under the Islamic banking outfit but also from other business and support units of the group.
The efficiency of OSKIB in managing its long and short term obligations, while increasing its assets and maximising profitability and increase level of trusts between clients and OSKIB were also significant factors, he said.