May 26 2009
|more articles from|
Mid East Sukuk market retains considerable promise
Asia has now the upper hand but GCC economic and structural prospects will redress the balance
Riyadh, 26 May, 2009 - NCB Capital, the investment banking arm of National Commercial Bank, Saudi Arabia's largest bank, believes that the dominance of new entrants from Asia in the sukuk issuance is only temporary. GCC issuers are likely to enter the market in significant numbers, given the considerable potential for new issuance.
Recent sukuk issuance in Singapore, Malaysia, Indonesia and Kazakhstan has driven a market revival and with Hong Kong, Japan and Korea all creating a favourable tax environment, Asia has become a more visible source of these instruments than has the GCC region.
"Two factors have depressed sukuk issuance in the GCC of late. The rulings made by the AAOIFI in 2008 regarding shariah-compliant sukuk structures generated some uncertainty and their effect has been amplified by the sharp economic correction brought on by the precipitous drop in the oil price," commented Dr. Jarmo Kotilaine, Chief Economist of NCB Capital. He was speaking at the Fifth Annual World Islamic Funds and Capital Markets Conference in Bahrain on Tuesday.
The GCC stills displays numerous opportunities for sukuk issuance, partly because of constraints on bank finance and the weakness of the equity markets and, in addition, there will be a wave of corporate restructuring, all of which should favour sukuks and redress the balance.
Education and experience will help to overcome any reservations and already some leading Saudi corporates, potentially followed by government-related entities, are creating benchmarks, and facilities are emerging for sukuk trading on Tadawul. If these positive trends continue, the critical mass needed for the take-off of a sukuk market should eventually emerge.
Dr Kotilaine concluded, "It would be a good idea to involve retail investors in the process, perhaps primarily through funds, as they need instruments offering reasonable capital guarantees and steady returns. Sukuks meet those requirements."
About NCB Capital:
Launched in April 2007, it is growing a strong reputation and profile as an important player in investment banking throughout the Middle East region with institutional, corporate and individual clients, and it is also growing its international presence.
Its strong links to its parent, National Commercial Bank, which is the region's largest bank, bring it peerless expertise in the markets locally.
NCB Capital organizes its 360 employees in three main business groupings - Wealth and Asset Management, Brokerage and Investment Banking.
NCB Capital has a presence in other parts of MENA through its subsidiaries: HC Securities in Egypt and Al Futtaim HC Securities in Dubai, EastGate Capital Group based in Dubai and Turkiye Finans in Turkey.
In 2008, NCB Capital acquired The Capital Partnership, a London-based specialist asset manager, to accelerate its growth specifically in asset management.
With around $13 billion of assets under management and one million clients, it is the Kingdom's largest manager of wealth for high net worth individuals.
In brokerage, it is the third largest player in terms of value traded with a market share of 12.5 percent (at March 09).
It is the market leader in the local Saudi mutual funds market with 33 percent market share (at March 09). NCB Capital launched the world's first Sharia-compliant real estate fund.
© Press Release 2009
© Copyright Zawya. All Rights Reserved.
More in Islamic Finance
- Solar plane completes second leg of cross-country flight in Texas
- College student snares record long Burmese python near Miami
- What's in a name? U.S. starts using Myanmar as well as Burma
- Marijuana waste helps turn pot-eating pigs into tasty pork roast
- Man climbs onto dome of St Peter's to protest Italian politics
- There's More