Saudi, Malaysia tee-up to boost their Islamic finance markets

Saudi Arabia’s Tadawul & Bursa Malaysia agreement expected to boost growth in both bourses
(Photo for illustrative purposes only)
By Courtney Trenwith
Sun 23 Mar 2014 01:51 PM

Bourses in Saudi Arabia and Malaysia, the world’s two largest Islamic financial services markets, have signed an agreement expected to boost both stock markets, according to the Oxford Business Group.

Saudi Arabia’s Tadawul and Bursa Malaysia agreed to share expertise and develop human resources covering equities, mutual funds and sukuk (Islamic bonds).

The markets jointly hold $682 billion in Islamic banking assets.

“A cooperation agreement between the bourses of Malaysia and Saudi Arabia stands to help the industry grow at a greater clip in both countries,” the report by Oxford Business Group, a global consultancy, said.

The deal follows one between Malaysia’s central bank and the UAE in October bolstering economic ties, including in Islamic finance services.

Dubai has announced its intention to become an Islamic financial capital. Malaysia, whose bourse hosts the largest and most liquid market for sukuk, is the largest Islamic finance centre, followed by London, while the Tadawul lists the world’s biggest Islamic banks.

Globally, Islamic financial assets are estimated to be worth $1.3tn and international ratings agency Standard & Poor’s expects the industry to grow at 20 percent annually from 2011 to 2015.

Islamic countries have intensified their use of shariah-compliant banking and established regulatory frameworks in recent years, although none has drafted Shariah-compliant laws that could be used to settle the disputes that arise from their use, according to Oxford Business Group.

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