The comments were made at an Islamic funds seminar in Hong Kong, where the Securities and Futures Commission and the Securities Commission (SC) Malaysia discussed strengthening the Islamic finance proposition of both countries.

The conference coincided with the unveiling of Malaysia’s RHB Asset Management maiden Islamic balanced fund targeting Hong Kong investors.

Alexa Lam, SFC’s deputy chief executive and executive director, investment products, international and China said the regulator will work “closely” with both the Malaysian capital market regulator and the global Islamic finance community to develop the country’s Islamic finance platform.

Lam said she sees Islamic finance as a “valuable proposition” that can propel innovation and diversity in the country.

“Our robust infrastructure and world class reputation as well as first-mover advantage in renminbi finance and products, all combine to make Hong Kong an excellent platform to further develop Islamic finance products for sale to investors domestic and internationally.”

With China’s measures to internationalise its currency and steps to boost the capital markets, Hong Kong has developed as the key offshore renminbi business centre for channelling the offshore RMB investments into the mainland.

Further, initiatives such as the mutual stock market access and the expected “mutual recognition of funds” are seen as  enhancing the attractiveness of the country to global investors.

Ranjit Ajit Singh, chairman of the Malaysian capital market regulator said: “Malaysia has been the Islamic funds gateway in Asia, linking the Middle East and Europe to this part of the world. While Hong Kong can leverage on Malaysia’s Islamic fund management capabilities, Malaysia at the same time would benefit from Hong Kong’s strength as an international financial centre.

“This potent combination can add a new dimension to the global Islamic finance market.”

According to data published by the regulator in March, Malaysia maintained its lead as the world’s largest sukuk market, accounting for 69% of global sukuk issuances in 2013. The Islamic capital market in Malaysia grew by 8.8% in 2013 to RM1.5trn ($0.47trn, £0.23trn) with Shariah-compliant assets representing 56% of the overall capital market.

Malaysia has been taking steps to boost its capital markets and recently announced a raft of measures in this direction, including steps to open the local asset management industry to foreign firms.

RHB Asset Management, a wholly-owned subsidiary of Malaysia’a RHB Investment Bank had launced the  RHB-OSK Islamic Regional Balanced Fund in Malaysia in April.

RHB Asset Management which is Malaysia’s second largest retail and institutional fund manager is planning to introduce two more Shariah-compliant funds in the country next year, according to Ho Seng Yee, CEO and regional head of retail distribution.