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EGYPT:
The Egyptian Islamic Finance Association (EIFA) has launched a new
Shariah compliant index comprising of Egyptian stocks. Compiled by the
Malaysian office of Chicago’s World’Vest Base (WVB), the index was
rolled out with a view of attracting investments from neighbouring
countries in the Persian Gulf region.
Speaking
to Islamic Finance news,
Philippe O Piette, the chairman and CEO of WVB’s Malaysian operations,
explained that the debut Egyptian index is a part of a family of
indexes. “We are in the process of building a suite of global Shariah
compliant indexes. The next one would be for Libya and Tunisia, and
thereafter the rest of the MENA region.”
The
index is approved by EIFA’s Shariah council and adheres to AAOIFI’s
Shariah Standard No. 21 which lays down the regulations relating to the
trading of securities. The standard screens out companies engaged in
activities prohibited under Islamic law and require that businesses do
not derive more than 5% of their total revenues from various
non-Shariah activities, including charging interest. The standard also
limits the amount of debt and deposits that a company can have with
non-Islamic banks to 30% of the company's total market capitalization.
The
vendor analyzes and applies the criteria to financial position and
income statements for all the companies traded on the Egyptian Stock
Exchange (EGX) then compiles a list of fully compliant, mixed and
non-compliant stocks traded on EGX. It then produces an index of the 30
most liquid compliant stocks, explained Mohammed Altaweel product
manager at Cairo’s WVB, to a local daily. He also highlighted that
foreign investments are part of the solution to Egypt’s economic woes.
According
to Muhammad Al-Beltagy, the chairman of EIFA, the association would
monitor the release and implementation of the index in accordance with
the current circumstances of the market, after spending time reviewing
the Quran and Sunnah. Following a partnership agreement signed earlier
in February, EIFA members including Islamic banks, funds and exchanges
can now access data provided by WVB, to foster investor-familiarity
with the index concept and boost participation in the country’s Islamic
finance market.
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