Fund gives access to China A-share market
Saudi and other GCC (Gulf Cooperation Council) investors who are interested in diversifying their investment portfolios to include opportunities in the emerging markets of East Asia, especially Mainland China, now have access to an innovative multicurrency open-ended Islamic wholesale fund which will invest exclusively in a select Shariah-compliant stock universe comprising some of the most sought-after companies in China. This follows the recent launch in Kuala Lumpur in the presence of Zarinah Anwar, chairman of the Securities Commission of Malaysia, the capital markets regulator, of a pioneering Islamic investment fund by HwangDBS Investment Management Berhad and Asian Islamic Investment Management Sdn. Bhd. (AIIMAN) that is aimed at giving investors direct access to the highly restricted and lucrative China A-share market.
China has huge potential for Islamic finance given that it is the world’s most robust economy with double digit GDP growth rates forecast for the next few years; it is the manufacturing hub for the world; it has huge infrastructure development requirements; it boasts the world’s largest liquidity; and it has a Muslim population of between 50 to 100 million.
China over the last year has attracted some Islamic investment out of Bahrain, the UAE and Malaysia, mainly in joint venture Islamic finance companies and real estate Mudarabas. Last year, a Malaysian entity even issued a sukuk backed by real estate assets in China and which is listed on the Hong Kong Stock Exchange. Indeed, Hong Kong is positioning itself to be the gateway for Islamic finance investments and opportunities in Mainland China, and is in the process of reviewing certain legislation to ensure tax and other neutrality for equivalent Islamic products such as sukuk, Murabaha and Ijarah. The HwangDBS AIIMAN A20 China Access Fund, is the first of its kind to be launched in Malaysia and globally.
China’s equity markets is supported and driven by the huge domestic liquidity and sheer growth of the country’s economy, which is heading once again to double digit GDP growth rates. Wealth created in China remains within the country due to capital control polices put in place by the local government in order to strengthen the domestic economy and indirectly lessen exposure to external market volatility. In a short span of two years, China’s market capitalization grew by almost tenfold from RMB3 trillion in 2005 to RMB32.5 trillion in 2007.
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