Investors seek 'low risks after downturn'
Manama, May 25, 2010
Investor sentiment has shifted in both Islamic and conventional finance since the economic downturn with people now looking at lower risk investments, delegates at the conference were told.
'People are looking to move away from equities to safer havens like gold and cash at the moment,' said Malaysian Stock Exchange global head of Islamic markets Raja Teh Maimunah Raja Abdul Aziz.
'High net worth individuals have been seeking safe and tangible investments and more wealth is allocated to fixed income and cash deposits,' she said.
'In this respect, product diversification plays an important role in catering to investors who have lower risk appetites in the interest of capital preservation.
'The existence of products such as Islamic Exchange Traded Funds, Leasing Funds and Real Estate Investment Trust offer these investors more choices.
'At the same time, these products also appeal to those who are seeking defensive investments where the returns may be marginal yet stable,' she added.
She said that investors were now more concerned about preserving capital than making high returns in the current economic climate.
'As investor cautiousness prevails while countries inch towards economic recovery, it is equally as important to continuously work towards enhancing corporate governance and regulatory standards,' she added.
'Sharia compliance calls for increased transparency and good governance, and is focused upon offering investments that are safe and liquid.
'It will enhance the value proposition of a company seeking to maintain their relevance and attractiveness on investors' radars - especially the cautious ones.'
She added that Malaysia's strong fundamentals had given it an edge in leading the world in Islamic finance.
'Bursa Malaysia (the Malaysian Stock Exchange) remains committed in furthering the Malaysian International Islamic Financial Centre 's agenda of making the country a global hub for Islamic finance,' she said.-TradeArabia News Service