Shariah-compliant indices outperform non-Shariah benchmarks on Bursa Malaysia

KUALA LUMPUR - The FTSE4Good Bursa Malaysia Shariah Index and the FTSE Bursa Malaysia EMAS Shariah Index marginally outperformed their non-Shariah counterparts in the first seven months of this year, according to Bursa Malaysia.

Bursa Malaysia chief executive officer (CEO) Datuk Muhammad Umar Swift said this reflects growing investor confidence in companies prioritising sustainable and ethical practices, underscoring the financial viability and attractiveness of Shariah-compliant investments.

Regarding key metrics for Shariah-compliant securities in the first half of 2024, he noted that by the end of June, 833 out of 1,049 listed counters on Bursa Malaysia-representing 79.4 per cent-were Shariah-compliant.

"The market capitalisation of Shariah-compliant securities grew 19.7 per cent year-on-year to RM1.3 trillion, making up 65.2 per cent of total market capitalisation.

"The average daily trading value (ADV) for Shariah-compliant securities rose 50.9 per cent year-on-year to RM2.1 billion, now accounting for 65.3 per cent of total ADV," he said in his welcome remarks at the Invest Shariah 2024 conference today.

He also highlighted that on May 7, 2024, Bursa Malaysia achieved a historic milestone by surpassing a market capitalisation of RM2 trillion.

The local bourse's capital market has attracted significant interest, leading to increased participation from both domestic and foreign investors, primarily driven by the government’s effective economic restructuring and fiscal reforms, he added.

"The FBM KLCI remains resilient, consistently holding support above the 1,600-point level, despite recent fears of a US recession and a global decline in equity market indices, partly due to the unwinding of the Japanese yen carry trade."

As of the end of 2023, Malaysia’s Islamic finance assets stood at RM3.8 trillion, positioning the country among the top three globally.

In the Malaysian capital market, the Islamic Capital Market totalled RM2.4 trillion in 2023, representing 64 per cent of the country’s total capital market, according to the Securities Commission.

"We are at a pivotal moment in finance, where the principles of ethical conduct, financial inclusion, and a stakeholder-driven approach are becoming increasingly paramount.

"The Securities Commission Malaysia’s recent introduction of the Maqasid al-Shariah Guidance for the Islamic Capital Market is a testament to this shift," Muhammad Umar noted.

He emphasised that this guidance highlights the importance of creating a just financial system that not only meets current needs but also ensures sustainability for future generations.

Meanwhile, CGS International Securities Malaysia Deputy CEO Khairi Shahrin Arief Baki observed that the ringgit's recent recovery against the US dollar and other major currencies, coupled with the year-to-date performance of the FBM KLCI, further illustrates renewed investor confidence in the country. - BERNAMA