1st ASIA SUKUK SUMMIT 2009

The global Islamic capital market, especially the Sukuk market, is showing signs of activity once again despite the effects of the credit crunch and the worsening global recession as a result of the current financial turmoil.

At the end of December 2008, Jeddah-based Saudi Hollandi Bank (SHB) successfully closed a SR775m Mudaraba Sukuk Issuance, which is in fact the first tranche of an approved SR1.5bn Islamic Floating Rate Notes (FTN) Programme. The proceeds of the issuance will be used to support SHBs capital. Perhaps most encouragingly, the issuance received a good response from institutional, corporate and private investors.

At the same time Turkey is finalizing the requisite legal framework to facilitate its debut sovereign issuance and the Treasury in Ankara has already indicated its preference for a vanilla Sukuk Al-Ijara structure.

Turkish State Minister Mehmet Simsek has confirmed that the government is looking at alternative sources of financing and is in the process of drafting enabling legislation to facilitate such financing instruments (Sukuk) which, according to the minister will meet the demands of investors in parts of the world where liquidity is high.

Selim Yesilbas, the Head of the International Finance Markets at the Turkish Undersecretariat of Treasury, confirmed to a local newspaper that the government was exploring the possibility of issuing a sovereign leasing Sukuk (Sukuk Al-Ijara) on a sale-and-lease back structure.

The Privatisation Administration and State Planning Office in Ankara have already jointly concluded a study and consultation on the possibility of the issuance of a sovereign Sukuk by The Turkish Finance Ministry.

In London last week, Dr Ummaya Toukan, Governor of the Central Bank of Jordan, confirmed that he is strongly in favour of Jordan issuing a debut sovereign Sukuk through the Ministry of Finance, and that he was confident that this would happen during this year. Jordan already had the necessary legal and tax framework in place to facilitate such an issuance.

The Japanese market has also been less affected by the global financial turmoil, with the Nikkei performing better than counterparts in the US and Europe. Not surprisingly, Daiwa Asset Management, which last year launched the Daiwa FTSE Shariah ETF (Exchange Traded Fund) off the FTSE Shariah Japan 100 Index, is reporting renewed interest from GCC and south east Asian investors in the fund.

Similarly, Jeddah Municipality, which has launched a SR30bn urban regeneration plan for the next five years is keen on the involvement of the private sector and Islamic capital market to finance a huge slice of the plan. We will definitely welcome any initiatives from the Islamic finance sector. We are looking for value-for-money and cost-effective proposals. There is still a considerable amount of liquidity in the market, Dr. Abdulgader Amir, Vice Mayor of Urban Development Municipality of Jeddah confirmed in London in December 2008.

These developments augur well for the upcoming 2009 Asia Sukuk Summit, organized by ICG Events in cooperation with the Hong Kongs Treasury Markets Association (TMA), on 19th - 20th February 2009 in Hong Kong, along the theme Towards a New Silk Route for Islamic Finance.

This follows the highly successful inaugural London Sukuk Summit along the theme Strategies for Today; Demystifying Islamic Capital Market Products held in June 2007, and the equally successful follow-up London Sukuk Summit in June 2008 along the theme Gearing up for UK Sukuk Originations.

Hong Kong, the worlds third largest financial centre after London and New York in terms of stock market size and fund-raising ability, last year embarked on a series of exciting initiatives to facilitate Islamic finance in the region, especially Mainland China. The Hong Kong Government, according to Eddie Yue, Deputy Chief Executive of the Hong Kong Monetary Authority (HKMA), is reviewing its securities legislation to facilitate the issuance of Islamic securities in the market.

Hong Kong is positioning itself as the natural choice as a gateway to doing business, including Islamic investments, in China. There is a lot of interest from Middle East investors wishing to invest into China. Hong Kong is the only fund-raising platform for China outside the mainland which is like a window that meets with the international markets. So if investors from the Middle East want to access China, they will look at Hong Kong, which we see as serving as a bridge between the Middle East and China, stresses Mr Yue.

While the Islamic finance market, according to pundits, may see some problems due to the contagion of the credit crunch, market players are confident of a pick later this year through to 2010.

With all these activities, the 2009 Asia Sukuk Summit is a must-go-to event to keep market players and regulators informed about the latest developments in the Islamic capital markets in general and Sukuk and securitisation in particular, which allows for an industry-led focused analysis of various regions and at the same time provides a platform for regional cooperation and eventual convergence.

While the tried-and-tested vanilla structures will continue to flourish in a market that is still taking off; there are already signs that some of the more sophisticated originators and investors are looking for more value-added and innovative structures. We are also seeing new innovations in asset allocation in Sukuk, securitisations and other financing facilities - ranging from rights and obligations on petrochemical marketing contracts; pools of electricity meters and the tariffs due on them; and payment through mobile phone airtime. Asia has also pioneered social Sukuk issuances involving Waqf properties.

The 2009 Asia Sukuk Summit is specifically aimed at harnessing these developments to keep you informed about the Sukuk market developments and innovation; to provide a platform for dialogue with your peers; and to give you a voice in contributing to the future direction of the Islamic debt and capital markets!

For further information, please contact info@icg-events.com or visit the event website at www.sukuksummit.com/asia.