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Sharia stocks shed 23.4% of value in year

But investors benefit from lack of exposure to financials, S&P report says.

  • Staff Report
  • Published: 23:32 October 28, 2008
  • Gulf News

Dubai: Sharia investors have not been immune from the global equity market sell-off with more than $5.6 trillion wiped off the value of Sharia-compliant equities worldwide during the third quarter of 2008, according to Standard & Poor's, the world's leading index provider,

However, the latest review of the S&P Global Sharia Index Series confirms that in most cases, Sharia investors have benefited from their lack of exposure to financials, which have been the focus of the market sell-off.

Stocks deemed to comply with Islamic law lost 23.4 per cent of their value on a total return basis over the year to September 30, 2008, as measured by the S&P Global BMI Sharia index, which covers 52 of the world's largest developed and emerging markets.

The non-Sharia conventional index, S&P Global BMI, fell 25.3 per cent over the same period. Sharia-compliant stocks in emerging markets bore the brunt of the selling, with the S&P Emerging Markets BMI Sharia plunging 37 per cent, compared to a 35.4 per cent loss for its non-Sharia counterpart.

"While equity markets around the world have experienced a tumultuous quarter, Sharia investors continue to be shielded to some extent by the exclusion from their portfolios of financial stocks and other highly leveraged companies, which do not satisfy the strict compliance criteria associated with Islamic law," said Alka Banerjee, Vice President, Standard & Poor's Index Services.

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