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…
Malaysian Islamic Capital Market: In 2000s
7
The history evolved…
2001
20002002
2007
2009
2005
2006
2008
Malaysian Islamic Capital Market: In 2010s
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]
Al-Quran mentions about
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]
Al-Quran mentions about
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
Qualitative 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.
Qualitative Assessment
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
2. FTSE Bursa Malaysia
Hijrah Shariah Index
3. FTSE Bursa Malaysia
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
NAV (March 2017) RM54.59 mil
MyETF-MSEAD
NAV (March 2017) RM49.24 mil
MyETF-AGRI
NAV (March 2017) RM20.54 mil
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
Tranche Value RM100 million
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
Tranche Value RM100 million
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
Qualitative Assessment
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
Islamic Capital Market, Bursa Malaysia
@ICM_Bursa
@ICM_Bursa