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The Islamic equity market will ride out the volatile market less scarred than the conventional equities especially in view of the current US subprime mortgage crisis, said Ireland-based Oasis Group Holdings executive director Hassan Motala.
“Market volatility will increase due the US subprime issue and the syariah-compliant equity would benefit as they do not have direct exposure to the subprime, thus making the syariah-compliant fund in a better position compared to the conventional ones,” he said.
Oasis manages the US$300 million (RM1.01 billion) Oasis Crescent Global Equity Fund, to which AmInvestment Group’s AmOasis Global Islamic Equity, which has a fund size of 200 million units, serves as a feeder fund. The Oasis Crescent Global Equity Fund is mostly invested in Europe, the US and Japan.
Asked if Oasis could invest in syariah-compliant companies that are listed on the Bursa Malaysia, Hassan said it had mandate to invest here but had its own set of investment criteria to meet.
“We have not made any investment in Malaysia with this fund. We have missed out on a couple of opportunities in the last couple of years. But we are looking at an opportunity at the moment and hope to come to a decision in the next month,” Hassan told The Edge Financial Daily.
“We focus on high quality companies, strong market leaders, good brands and have niche position in its industry. We also look at strong management with good track records, companies that generate good cash flow and has strong balance sheets
“Good margins and generates high return on equity are also our criteria,” he said, adding that the stocks must also be traded at an attractive price.
Hassan said the Malaysian equity market had moved up in the last 18 months and there were a few opportunities here. He also said more Islamic bonds had been issued into the market in the past couple of years especially from Dubai and Malaysia.
“More Islamic bonds will likely to develop next year and it is good especially in the long term. I would like to see an Islamic bond market that is liquid and sufficiently sized for global investors,” said Hassan.
Asked on what that sets Islamic equity apart from the conventional ones, he said: “The risk. Syariah-compliant companies are usually lowly geared. When there is economic downturn, these lowly geared companies would do better.”
On whether Islamic equity would be a better choice for investment, Hassan said the Oasis Crescent Global Equity Fund had outperformed many benchmark funds including the NSCI which is the world index.
“You want a market manager that provides downside protection. Track record has proven that the fund has downside protection. In the past decade, the market has gone down by 10% but the fund has gone down only by 4.5%.
“It showed that it has 45% down side correlation,” said Hassan who expected some market pressures especially in richly valued emerging markets such as China next year. |
