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August 20, 2009 20:37 PM
Islamic Finance To Generate Greater Interest This Year
KUALA LUMPUR, Aug 20 (Bernama) -- Islamic finance will generate greater interest this year when the global economic outlook improves.
RAM Holdings Bhd's group chief economist Dr Yeah Kim Leng said investors would seek alternative instruments that can mitigate risk of unsupervised leverage and debt creation.
He told Bernama on the sidelines of the Malaysian Corporate Conference 2009 here today that investors would look at Islamic finance more seriously after the current global financial crisis.
Yeah said there was growing interest for Islamic finance during the current crisis as investors shifted their focus to alternative instruments to reduce unmanageable risk of over-leveraging and over-speculation.
The economist pointed out that the underlying risk for Islamic finance remained in terms of the issuers' ability to generate enough cash flow to repay borrowings.
" However, the Islamic finance concept of no interest payment and share in risk capital provides a different avenue for investors," Yeah added.
In terms of broadening the bond market, he said there was a need to to boost the ringgit-denominated Islamic bond or sukuk.
A foreign currency denominated bond, he said, would provide an avenue to raise funds for capital expenditure.
-- BERNAMA
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