Inve$t | Market Sentiments | 28 July 2023
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According to Prime Minister Datuk Seri Anwar Ibrahim, Bank Negara Malaysia (BNM) and the Securities Commission (SC) have been taking steps to ensure the sustainability and effectiveness of the Islamic finance system by raising the standards to not only halal, but also ‘halalan thoyyiban’ (lawful and good). Both BNM and the SC have charted the course towards ‘halalan thoyyiban’ via the Malaysia International Islamic Financial Centre through collaborations with the industry and the Islamic finance ecosystem, including zakat and waqf boards, the banking system, Islamic stock market and sukuk. This is done by focusing on equity financing, including venture capital, equity crowdfunding and the Islamic digital economy, Islamic social finance (including zakat, waqf and sadaqah), as well as the ‘blended finance’ methods that use funds from a wider range of sources.
Speaking at the launch of the Madani Economy: Empowering the People, he said these efforts will help to enhance the Islamic financial system in Malaysia and further strengthen our position as a leader in the global Islamic economy. This would also help to boost the growth of environmental, social and corporate governance (ESG) funds globally.
A holistic and Madani national development effort cannot be achieved without a financial system that is fair, just and based on Maqasid Sharia (the objectives and purposes behind Islamic rulings). Malaysia has a holistic Islamic finance ecosystem after the establishment of Bank Islam 40 years ago and Lembaga Tabung Haji 60 years ago. Malaysia’s Islamic finance system has been recognised as the world’s best by independent analysts. Today, the Islamic banking’s share of the financing market is at 44.5 percent (RM974.1 billion), and the Islamic capital market remains the main component of the Malaysian capital market, accounting for 64.3 percent (RM2.32 trillion).
The Leading Index recorded 110.3 points in May 2023, expecting an encouraging economic outlook albeit cautious sentiment – DOSM
According to the Department of Statistics Malaysia, the performance of the Leading Index in May 2023 recorded a better negative growth of 1.1 per cent with 110.3 points as compared to a negative 2.7 per cent in April 2023. This negative performance was pulled down by Real Imports of Semi-Conductors and Real Imports of Other Basic Precious & Other Non-Ferrous Metals. Nevertheless, LI’s monthly performance grew by 1.8 per cent, as a result of growth in five (5) LI components except Expected Sales Value in Manufacturing (-0.8%) and Real Money Supply, M1 (-0.3%).
Despite improvement in both indices for this reference month, the smoothed LI growth rate remained below the 100.0 points trend. Accordingly, Malaysia’s economy is foreseen encouraging in the near term, however, heightened global challenges should be taken into consideration.
As for the current economic situation, the Coincident Index (CI) maintained a positive annual growth momentum since September 2021 by registering 3.1 per cent to 124.3 points in May 2023 as compared to 120.6 points in the same month of the previous year, contributed by the good performance of all components. Simultaneously, the monthly change in CI also increased by 2.5 per cent, with Capacity Utilisation in Manufacturing (1.2%) contributing significantly to the rise.
The Diffusion Index for LI remained 57.1 per cent in the reference month. Meanwhile, the Diffusion Index for CI increased to 100.0 per cent for the first time in 2023.