Dhaka Stock Exchange launches Shariah compliant index to lure in GCC investors - IFN

Dhaka Stock Exchange launches Shariah compliant index to lure in GCC investors

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BANGLADESH: The Dhaka Stock Exchange (DSE) announced the launch of its Islamic index, DSEX Shariah Index (DSES), yesterday. DSE collaborated with S&P Dow Jones Indices in designing the methodologies for the DSES. The index will serve as a Shariah compliant broad market benchmark which measures the performance of the Bangladesh equity market. Commenting on the launch, Ahsanul Islam, the president of the DSE, said: “Many people and institutions do not want to make investments in the stock market as there are no products reflecting Shariah investment principles. Now they will be encouraged to come to the market.” Ahsanul hopes to entice fund managers and investors from GCC countries to participate in the Bangladeshi stock market. Subject to specific conditions, listed stocks under the DSEX will be allowed for placement in the DSES. Companies engaged in non-Shariah compliant activities including non-Islamic financial institutions are ineligible for listing under the DSES. Should an organization’s revenue from non-Shariah compliant activities exceed 5%, it will also be excluded from the Shariah index. According to Ahsanul, only companies which are incorporated, managed and operated in a fully Shariah compliant manner, with a Shariah supervisory board, will be eligible for listing under the DSES. The DSES is constructed as a subset of the DSE Broad Index (DSEX) and includes all stocks included in the parent index that pass rule-based screens for Shariah compliance. Constituents of DSEX are screened based on two broad parameters: namely a sector-based screen and an accounting-based screen. The Islamic index will have a base point of 1,000 and is an income-generating product, as recommended by S&P. The DSES will be rebalanced on a monthly basis.