Page 66 - Full Book_24.4.2021

MANAGEMENT
DISCUSSION & ANAlYSIS

Malaysian Stock Market is on a Recovery Path
With the announcement of the MCO measures in
early March 2020 the main index of the Malaysian
stock exchange (FBM KLCI) fell by more than 20% Islamic finance assets remain
within a few days and dropped to its lowest level concentrated in the three leading
in more than a decade. However, as the pandemic- markets of Iran, Saudi Arabia and
INTEGRATED ANNUAL REPORT 2020 recovery. By mid-July, shares were trading again Malaysia, which between them
related government measures were announced
globally, stocks market started to show signs of
accounted for 66% of Islamic global
at the pre-MCO level and by late November 2020
stocks exceeded their peak level as of end of 2019.
assets in 2019. Malaysia still remains
Although the index generally recovered, there
were sharp differences between those shares that
benefited from the crisis and those that suffered the world’s biggest Sukuk market.
substantially. Among those ahead of the curve
62 were healthcare stocks and technology shares as
consumers turned online to solve their daily needs
and energy shares following the government’s
announcement to support energy efficient home
BIMB HOLDINGS BERHAD 199701008362 (423858-X) and aviation sectors, as well as consumer goods, US$1,389 14 % 1,526
appliances. Those that were disproportionately
affected by the crisis included stock in the tourism

as consumption is expected to contract along with
the decline in GDP.
Total Islamic
Annual Growth of
Trillion Total Islamic
Islamic Finance Assets
Finance Assets in
Financial
Gross funds raised in the Malaysian capital market
2019
Institutions
in 2019
rose 5.6% to RM261.4 billion during 2020 from a
year earlier. This was mainly on account of higher
issuance from public sector which increased to
RM157.3 billion while funds raised by the private
sector declined to RM104.1 billion. The latter’s REVIEW OF THE ISLAMIC FINANCE INDUSTRY
The Islamic finance industry’s assets grew by 14% in 2019 to
expansion was contributed by strong demand US$2.88 trillion, returning to its long-term pattern of strong growth after
for government papers or bonds to support the the slowdown in 2018, when the industry expanded by a more moderate
various stimulus packages. 2%. The strong growth in 2019 was aided by large issuances of Sukuk
in the traditional Islamic finance markets of Saudi Arabia, Malaysia, Iran,
This was reflected by the high issuance of Qatar, Bahrain, and the UAE. There was a surge in Islamic banking assets,
Malaysian Government Securities (“MGS”) which up by US$248 billion on year, particularly in the largest Islamic markets
rose to RM76.7 billion while the issuance of such as Saudi Arabia and Iran. Islamic funds saw the fastest growth
Islamic-based Malaysian Government Investment overall, with double-digit growth recorded in Malaysia, Indonesia, Iran,
Issues (“MGII”) expanded to RM80.6 billion. Saudi Arabia, Turkey, and Luxembourg. Islamic finance assets remain
During the same period, foreign holdings of MGS concentrated in the three leading markets – Iran, Saudi Arabia and
and MGII were remain at elevated levels of 40.6% Malaysia – which between them accounted for 66% of global assets in
and 6.6% respectively at the end of 2020. Such an 2019. Malaysia still remains the world’s biggest Sukuk market.
appetite by the foreign institutions suggest better
conviction on Malaysia’s government credit risks as
well as deep and liquid bond markets.