LONDON: Indonesia Stock Exchange plans to cooperate with London Stock Exchange to develop a sharia capital market.London market authority has expressed its interest in developing sharia market either in England or Indonesia, IDXs President Director Ito Warsito told Bisnis.England wanted to solidify its role as the global biggest sharia market.Both parties will agree on an initial step of cooperation by looking at the potential use of benchmark indices such as FTSE Shariah.At the moment, sharia capital market development in Indonesia is not as good as Malaysia that has Labuan as the shariah market. Singapore has a sharia market as well.Nevertheless, IDX has 214 shares in Indonesia Sharia Stock Index (ISSI) released on May 12.London realizes that Indonesia has a big potential.One of the attractive sharia products is sharia bond. HSBC Holdings Plc forced to hand the number one position as the most active global sharia bond issuance underwriter to Maybank Investment Bank BhdThe Europe biggest bank unsuccessfully maintained its position as bond issuance in 6 Gulf Cooperation Council (GCC) countries slumped 23% in the first six months of 2011 to US$1.9 billion due to political dispute.Sharia bond marketBased on Bloomberg data, Maybank achieved the first position as the most active sharia bond issuance underwriter per June 2011 by managing sharia bond amounted to US$3 billion with 22% market share. It is followed by HSBC, CIMB Group and Standard Chartered Plc.HSBC manages corporate and state sharia bond amounted to US$2.62 billion with 19.9% market share while CIMB US$2.59 billion with 19.6% market share.CIMB who is ranked third, with Maybank, HSBC and Citigroup Inc. appointed as the underwriters by Malaysian Government in managing the government sharia bond worth US$ 2 billion, which was published this week.Sharia bond issuance is expected to double this year than US$6.5 billion in 2010, supported by Malaysian development plan worth US$444 billion in the next 10 years and issuance from Islamic Development Bank and Pakistan.Based on HSBC/NASDAQ Dubai US Dollar sharia bond index, sharia bond return ratio on the last six months reached 5.4%. Such achievement is in line with market development by 4.8%, stated JPMorgan Chase & Co.s EMBI Global data.HSBC/NASDAQ Dubai US Dollar index also showed the narrower gap between average yield between sharia bond and London Interbank Offered Rate (Libor)In Indonesia, PT Bank Syariah Mandiri (BSM) ready to absorb sharia-based bond issuance with a maximum IDR5 trillion absorbent value.Indonesia Government is planning to issue sharia bond or project-based state sharia bond worth IDR2.09 trillion in August to fund the work of 1,606 construction projects by two ministries. (t05/msw)

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