Capital markets executive summary | Tue 31 Oct 2023

Capital markets executive summary | Tue 31 Oct 2023

Fusang issues the first tokenised institutional sukuk in the world

Fusang Exchange is a member-only network of regulated financial institutions, which mirrors the operating structure of non-digital stock exchanges, facilitating the tokenisation, listing, trading, settlement and custody of digital securities backed by real-world assets. It is regulated by the Labuan Financial Services Authority. Fusang scored a first by tokenising and listing digital sukuk that represent the actual sukuk issued by the International Islamic Liquidity Management Corporation (IILM). The tokenisation and listing exercise, which provides investors access to shariah-compliant high-quality liquid assets (HQLA), used the proprietary Fusang Depository Receipt (FDR) structure to wrap the underlying sukuk into digital form. The FDR retains full transparency and certainty of investors’ legal rights and adheres to Shariah standards set by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). ZICO Shariah Advisory Services is the shariah adviser for the issuance of the ERC-20 compliant tokens. The company plans on issuing other tokenised securities backed by government-linked assets because high-quality liquid assets will remain in demand amidst high interest rates.

Generali and UNDP launch new fund to boost SME insurance coverage

The global insurance company and the United Nations Development Programme (UNDP) launched the Insurance Innovation Challenge Fund (IICF) and invited participants to submit proposals on long-term insurance solutions to protect small and medium enterprises (SMEs) against climate and other risks. The proposals could integrate new technologies and a variety of distribution channels, or scale up current solutions. The insurance products should cover inventory, machinery, business continuity, staff, and specific or multiple risks. Winners will be selected through an open process as recipients of financial and technical support of up to USD40k to further develop their proposed solutions. The fund is part of Generali’s broader commitment to promote insurance for SMEs, which make up 97% of Malaysian businesses, to manage risks. The collaboration with UNDP offers a platform to share ideas and solution discovery to strengthen the SMEs’ resilience. Interested parties can apply for the IICF by submitting their application and supporting documents by 27 Nov.
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Malaysia and Singapore to improve business development fund

The Malaysia-Singapore Business Development Fund (MSBDF) was signed in 2004 for Malaysian and Singaporean companies to collaborate in exploring business and investment opportunities in 3rd countries. Almost 2 decades later, Minister of Investment, Trade and Industry signed a side letter with Singapore’s trade and industry minister witnessed by both countries’ prime ministers. During the First Annual Ministerial Dialogue session on 14 Jun 2023 in Kuala Lumpur, the respective ministries agreed to expand the scope of the fund’s financing to include projects implemented in Malaysia and Singapore. This improvement will boost economic cooperation, particularly in promoting cross-border trade and collaboration in the digital and green industries, apart from providing funds for enterprises to jointly pursue opportunities in 3rd countries.

Gamuda in 187.5MW Sabah hydropower project

The company signed an agreement with Sabah Energy Corp Sdn Bhd and Kerjaya Kagum Hitech JV Sdn Bhd to form a joint venture company, UPP Holdings Sdn Bhd. Gamuda will own 45% of UPP Holdings, Sabah Energy 40% and Kerjaya Kagum 15%. UPP Holdings’ wholly-owned subsidiary, Upper Padas Power Sdn Bhd, will develop the 187.5MW hydroelectric power plant in Tenom at a total project cost of RM4b including interest during construction. The construction period is 5 years, from 2024 to 2029, and the initial operating period will be 40 years. The project will be funded with internally-generated funds and borrowings at a minimum debt-to-equity ratio of 80:20. Upon completion, the hydropower plant will generate 1,052GWh of clean energy per annum. The counter closed at RM4.58.

China could cost Broadcom USD1.5b in penalties

The merger agreement between the company and VMware expires on 26 Nov, after which Broadcom will have to pay the amount to VMware as termination fees. The USD61b combination between the US-based chipmaker and the virtualisation software company already received approvals from the US, European Union, UK, South Korea and Japan. China’s approval is necessary because Broadcom earns 35% of its revenue from the country. US export controls that affect sales of chipmaking equipment to China underlie recent rejections by Chinese authorities. Intel’s acquisition of Tower Semiconductor was aborted after failing to secure Chinese approval. In 2018, President Donald Trump blocked Broadcom’s USD117b takeover of Qualcomm. VMware had agreed to the merger in May 2022 with a go-shop clause, which let the company solicit competing offers, but no other suitors emerged.