EIFA introduces new Egyptian Shariah index to boost foreign investment into the republic |
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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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