Thursday, November 19, 2009

Bank Islam targets initial fund size of RM100m for Ziyad NID-i

By T Vignesh
Bank Islam Malaysia Bhd expects a full take up within a month for its newly launched Ziyad NID-i, an investment product structured with an initial fund size of RM100 million, to take advantage of the recovery of Asia's equity markets.
Bank Islam's consumer banking division general manager Khairul Kamarudin (picture) said that this is the bank's second Islamic structured investment product, the first being launched last year.
The minimum investment amount for Ziyad NID-i is RM65,000 and subsequent investments are in multiples of RM5,000.
At the same time, Bank Islam is expecting to launch a deposit based product before the end of its financial year ending June 30, 2010, catered for retail consumers and corporate customers.
Khairul said Bank Islam is awaiting regulatory approvals.
On Ziyad NID-i, he said that it is designed for investors who hold the view that Asia's equity market will recover in the medium-to-long-term. Ziyad IND-i is a five year investment product in the form of Islamic negotiable instruments (INI) with a 100% capital protection upon maturity.
"The product has been structured to offer attractive return structure yet with conservative features to protect clients' interest.
"However, as the Asian economies continue to recover, the stock markets are also expected to perform well, thus providing potential higher yields for the fund," Khairul told reporters at the launch of the Ziyad NID-i product in Kuala Lumpur yesterday.
He said that investors may potentially enjoy a much better return than traditional fixed deposit rates.
Nevertheless, should the Asian economy deteriorate, it is anticipated that Ziyad NID-i investors should receive a minimum profit of 7.35% over the whole investment period or approximately 1.47% per annum if held to maturity. Khairul said that the fund is linked to a basket of stocks deemed to benefit from a massive stimulus plans undertaken by various Asian governments.
The stocks in the basket are China Mobile Ltd (China), CNOOC Ltd (China), Panasonic Corp (Japan), Canon Inc (Japan), BHP Billiton Ltd (Australia) and KKDI Corp (Japan). He said the six stocks chosen are constituents of the Dow Jones Islamic market Titans 100 Index, which consists of the world's largest 100 companies involved in Shariah-compliant businesses.
Khairul said that they were selected based on trading and liquidity considerations as well as analyst recommendations while conforming to geographical and sectoral diversification purpose along the lines of the Asian recovery theme.
In addition, these stocks will be monitored closely throughout the investment period to ensure no infringement of Shariah rules and principles. According to Securities Commission data as at June 30, 2009, four Islamic based funds were launched this year.
They are Am-Recovery Income-Capital Protected, CIMB Islamic Greater China Equity launched by CIMBPrincipal Asset Management Bhd, HwangDBS Aiiman Sukuk fund and AmanahRaya Islamic cash management.

(This story appeared in The Malaysian Reserve on Nov 17, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

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