KUALA LUMPUR: Malaysian ringgit-denominated sukuk have maintained liquidity above pre-Iran conflict levels, outperforming the broader global sukuk market amid continued geopolitical uncertainty, according to Fitch Ratings.
Fitch said Malaysian sukuk were among the most liquid in its coverage, alongside those from Hong Kong, supranational issuers and Indonesia, with average liquidity scores across these markets ranging between 69 and 95.
The firm said the average liquidity across all rated sukuk stood at 62 in early November, unchanged from Oct 1 but below the 68 recorded on Jan 30.
The overall score recovered about 12 per cent from 55 in March.
About 69 per cent of Fitch-rated sukuk had liquidity scores above 50 as at Nov 2, compared with a low of 64 per cent in March and 81 per cent in January.
“Malaysian ringgit sukuk remained the most liquid, continuing to trade above pre-conflict liquidity levels.
“The liquidity score of euro-denominated sukuk rose to about 81. In the Gulf Cooperation Council (GCC), local-currency sukuk were more liquid than bonds.
“By tenor, sukuk with maturities of under a year and those with maturities of 10 years or more were the most liquid,” it said.
Among GCC markets, sukuk from Saudi Arabia, Qatar and Kuwait recorded an average liquidity score of about 57.
Although liquidity in these markets was briefly affected by Houthi attacks in late October, it has since rebounded, but remains below January’s level.
Fitch expects sukuk liquidity to remain sensitive to geopolitical tensions, heightened interest rates, and capital reallocation from emerging markets to developed markets.