Malaysian Islamic funds, bonds that back will improve in 2011

Malaysian Islamic funds, bonds that back, which fell 40 percent this year, will improve in 2011 as the government's 444 billion U.S. dollars plan development attracts investors and stimulates international trade.

"I'm pretty sure I can beat the performance of this year," said Nor Hanifah Hashim, who helps oversee 25 billion ringgit ($ 8 billion) in Kuala Lumpur-based CIMB-Principal Asset Management Bhd Enhanced Sukuk Fund CIMB which the second-best performer. "I do not think foreign investors stop investing money in the region next year."

Malaysia's 32 funds tracked by us returned an average 3.8 percent this year from 14 December from 6.4 percent in 2009. They stayed the return of 9.2 percent in Indonesia and 8.3 percent in Pakistan. Worse performance for 23 of the funds.

The government's initiative of 10 years for private projects directed from a nuclear to a metro network will drive sales of Shariah-compliant debt, according to RHB Investment Management Sdn., Third party fund manager best-performing country. Issuance in Malaysia, which represents more than 50 percent of the 144 billion U.S. dollars in Islamic bonds outstanding worldwide, fell 30 percent in 201.

"Catalyst strong '

"The program of economic transformation is a very strong catalyst," said Sharifatul Hanizah said Ali, who oversees 12.2 billion ringgit as CEO of RHB Investment Bank, in an interview in Kuala Lumpur yesterday. "The opportunity to overcome prevail in the conventional and Islamic" bond markets, he said. RHB Islamic Bond Fund has gained 9.5 percent, down from 5.8 percent in 2009.

PB Islamic Bond Fund managed by Public Mutual Bhd headed back in Malaysia, earning a 10.1 per cent compared to 8.7 percent last year. Enhanced Sukuk CIMB returned 9.7 percent compared with 15.4 percent in 2009. Lum Ming Jang, senior Public Mutual investment, declined to comment in an email response to questions sent on 14 December.

Sales of debt consistent with Sharia law in Malaysia was reduced this year as investment firms, after declining last year's recession, the country's first in a decade. The issue was reduced to 22.4 million ringgit, 32 million ringgit in the same period in 2009. Global sales of sukuk, which pay yields of assets to comply with the ban on religion in the interest fell 28 percent to $ 14.5 million.

"It would be difficult to replicate the outstanding performance of 2009, credit spreads have fallen significantly in a dislocated market brought by the recent global financial crisis," said Wan Murezani Mohamad, Malaysia's Corp. analyst rankings, in an interview from Kuala Lumpur on 14 December.

Annual Return

Islamic bonds returned 11.7 percent this year, compared with 20 percent in 2009, according to HSBC / NASDAQ U.S. Dollar Dubai sukuk index. development of debt market gained 11.8 percent since December 31 JPMorgan Chase & Co. 's EMBI Global Diversified index shows.

The difference between the average yield of sukuk and interbank offered rate in London fell 47 basis points, or 0.47 percentage point this month to 314, and has dropped 154 basis points in 2010, according to HSBC / NASDAQ Dubai Dollar U.S. sukuk index.

The yield 3.928 percent Malaysian Islamic note denominated in U.S. dollars by June 2015 rose 36 basis points this month to 3.23 percent, according to prices provided by the Royal Bank of Scotland. Demand from investors to keep premium Dubai sukuk Malaysian government rather than decreased 62 basis points to 336 since November.

Sales Planning

Finance of Malaysia, Ahmad Husni Hanadzlah minister told reporters in Kuala Lumpur on September 28 that 19 development projects worth 151 billion ringgit will begin early next year. The additional spending will help sustain growth to 6 percent in 2011, compared with an estimated 6 percent to 7 percent this year, he said.

sales of government securities may increase next year due to increased debt maturing in comparison with 2010, according to a research report from CIMB Investment Bank Bhd on 13 December. Issuance of notes and non-Islamic Shariah, may rise to 90.5 million ringgit, 50 percent more than the gross debt this year, the report said.

Business Debt Malaysia Bhd, a venture capital firm owned by the Ministry of Finance plans to sell 500 million ringgit sukuk in September or October next year, CEO Maryland Zubir Ansori Yahaya said in an interview in Kuala Lumpur on September 28 . The company sold 500 million ringgit of Islamic bonds in August.

Ringgit gains

The speculation of the ringgit has expanded this year the best annual performance since 1973 can also attract more international investors to domestic obligations and drive profitability in 2011, according to the classification of Malaysia.

The currency appreciated 9.1 percent against the dollar, increasing the third largest in Asia after the Thai baht and the yen.

"Foreign funds are expected to continue to support the local bond market and its commitment to strengthening local currency are unlikely to disappear in the near future," said Wan in Malaysia Rating.