(See Previous Article on how Petro dollars are being used to build up the defense industry in the UAE-Building weapons with their Shariah funded dollars is OK, but not OK for US manufacturers. This is why Shariah banking, is quite frankly a farce and a lie. (comments by Allyson Rowen Taylor)
- Story by: James Redgrave
- Magazine: FinancialAdviser
- Published Thursday , June 19, 2008
Demand for Shariah investments is set to grow by one trillion US dollars by the end of the year, according to FTSE, which has launched a new index series for the market.
The indices provider’s Shariah Global Equity Index Series has a net capital value of more than US$16,000 trillion across 18 supersectors.
Any businesses which provide non-Islamic financial services like banking and insurance are barred from the series, along with all companies involved in non-halal foods, alcohol, gambling, pornography, tobacco and arms manufacturing.
To meet Muslim financial laws debt as well as cash and interest bearing items from the investments are kept below a third of the total asset value.
And total income from interest and non-compliant activities do not exceed five per cent of total revenue.
The index is weighted most towards oil and gas at 19 per cent, followed by healthcare with 12.5 per cent and technology with 12.2 per cent.
The largest businesses represented are Exxon Mobil, making up nearly 3 per cent of the index weighting, followed by Microsoft, 1.9 per cent and AT&T, 1.46 per cent.
Imogen Dillon-Hatcher, FTSE Emea’s managing director, called Islamic investments one of the most dynamic things to have recently affected the financial landscape.
She said: “To date there has been limited choice of Shariah investment vehicles of sufficient size for many larger funds.
“However, with demand growing across the global Muslim community Shariah compliant investments are expected to grow considerably.
“Thus pension fund trustees are under increasing pressure to provide investment options that greater reflect the diverse nature of their members.”
She claimed the investments were screened by Islamic finance experts at Yasaar, made up of various internal Shariah disciplines.
She added: “As both fund managers and product providers continue to acknowledge the demand in the market, Ftse believesShariah compliant investments will continue to grow at a rapid speed.”
HSBC was the first high-street bank to launch and Islamic pension fund, in May 2004.
A spokesman said: “With a total population of more than 1.5bn Muslims worldwide, there is strong demand for financial products and services that conform to Shariah, which restricts the payment and receipt of interest and prevents some Muslims from investing in equities.”