April 28, 2007 at 1:17 pm by Tom Lydon
Two major index providers are launching new Islamic equity indexes which could be the basis for a future exchange traded fund (ETF). Both MSCI Barra and Standard and Poor’s are moving into the Shariah-compliant benchmarks, meaning they follow the beliefs of Islam. Matt Hougan for Seeking Alpha reports these are not new concepts, the Dow introduced an index in 1999 and FTSE in 2000. There has been a growing demand from oil-rich investors in the Middle East, which has prompted MSCI and S&P to enter the field.
MSCI plans to launch in July 2007 with a Global Islamic Indices series and S&P will expand on the family it created last year. The indexes screen companies involving alcohol, tobacco, pork-related products, financial services, gambling and pornography; however the two providers use different screening methods.
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April 30th, 2007 at 3:30 pm
Why financial services are excluded? Is charging interest prohibited there? IOf so ,how the central banking system is operated there?
May 1st, 2007 at 1:33 pm
Muslims do not believe in paying interest. It is forbidden. Therefore, banks and credit cards companies are excluded. Not sure how the banking industry works there.