gif Ethical Investment
Sharia’a-
Compliant Investing-
Many Happy Returns?
It is currently a widely held belief that sharia’a-compliant investment does not reap the same volume of returns as conventional investing. Here in this article we investigate if this is the case. Does it pay to be an ethical investor? Which sharia’a- compliant asset classes are per- forming well and which aren’t? How can you as an Islamic investor make your sharia’a-compliant portfolio work for you?
Knowing your Limits
Islamic investment, by the very nature of its sharia’a-compliance, is limited in what areas it can cover. Haram industries include pig-rear- ing; tobacco; alcohol; adult entertainment industries and gambling. Islamic investors, therefore, are prohibited from investing in any as- sets or business activities connected with these areas. It is true that year-to-year these industries collectively yield billions of pounds, dol- lars and yen worldwide, but in terms of sheer numbers, the amount of industries that are off-limits to sharia’a investors are relatively few in the grand scheme of things. Lucrative areas that are open to the Islamic investor are numerous and include Real Estate; the Halal food industry; shipping; commodities; and most entertainment businesses such as sports teams and record companies. An article by Datuk Noripah Kamso states that a well-diversified sharia’a-com- pliant portfolio will consist of approximately 30 to 50 “fundamentally good companies”. Given the amount of companies that are listed on stock exchanges worldwide, it does not seem like such an impossi- ble task to select 30 to 50 sharia’a-compliant ones that will perform well for you. Kamso herself points out that, “Approximately 85% of the securities listed on Bursa Malaysia are Shariah-compliant”. It is not as if these securities are restricted to only a narrow selection of industries. Kamso’s table, reproduced below, shows the top 50 sharia’a-compliant companies on the Malaysian index; it’s clear to see that they are drawn from many different types of business activi- ties:
60 GlobalIslamic Finance June 2010
Top 50 Sharia’a-Compliant Companies in The Index (As At March 2009)
1. Sime Darby 2. Tenaga 3. IOI
4. MISC 5. Telekom 6.
Digi.com 7. TM International 8. Plus Expressways 9. PPB Group 10. YTL Corp 11. Petronas Gas 12. Kuala Lumpur Kepong 13. YTL Power International 14. UMW Holdings 15. Gamuda 16. IJM 17. SP Setia 18. Petronas 19. Parkson Holdings 20. Star Publication Malaysia 21. Batu Kawan 22. MMC Corporation 23. Lafarge Malayan Cement 24. AirAsia 25. Asiatic Development 26. Shell Refining Co (Malaysia)
27. KLCC Property Holdings 28. KNM Group 29. United Plantation 30. Top Glove Corp 31. Sarawak Energy 32. KFC Holdings 33. Malaysian Bulk Carriers 34. Puncak Niaga Holdings 35. Oriental Holdings 36. Dialog Group 37. POS Malaysia 38. Lingkaran Trans Kota Holdings 39. Kulim Malaysia 40. Malaysian Resources Corpora- tion 41. Mah Sing Group 42. Bintulu Port Holdings 43. Aeon Co(M) 44. Wah Seong Corporation 45. IOI Corporation 46. WCT Bhd 47. Hartalega Holdings 48. United Malacca
49. Hap Seng Plantation Holdings 50. Selangor Properties
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80