A shariah-compliant index is set to be introduced to the Dhaka Stock Exchange today to meet the requirements of Islamic fund investors.
“Many people and institutions do not want to make investment in the stockmarket as there are no products reflecting shariah investment principles. Now they will be encouraged to come to the market,” DSE President Ahsanul Islam said yesterday.
Titled the DSEX Shariah Index, it is designed and developed by the S&P Dow Jones Indices Methodology, a global leader in providing investable and benchmark indices for financial markets.
The DSE chief is hopeful that the index would particularly draw in the fund managers and investors from Gulf Cooperation Council (GCC) countries to the country's stockmarket.
The index, which will have a base point of 1,000, will be a saleable or income-generating product, as recommended by the S&P.
An investor, individual or institution, will have to pay fees to know the companies under the index, but no one can disclose the names of the companies trading in the index.
“It will be only for self use for taking investment decision,” he said, adding that the index will be rebalanced once every month.
Mahavir Kaswa, manager of S&P Dow Jones Indices' product management, said listed stocks under the DSEX index will be eligible to be placed in the DSEX Shariah Index, but they would have to fulfil certain conditions.
Exclusion from the DSEX will automatically exclude a company from the shariah-based index, he said.
Companies engaged in advertising and media, news or sports channel, newspaper, alcohol, cloning, tobacco, gambling and trading of gold and silver cannot be placed in the shariah index.
Even financial institutions except Islamic banks, Islamic financial institutions, Islamic insurance companies will not be eligible, Kaswa said. If more than five percent of a company's revenue comes from non-compliant activities it cannot be placed in the DSEX Shariah Index.
Companies incorporated and managed in a completely shariah compliant manner, having a shariah supervisory board and doing transactions (business and financial) in accordance with shariah principle will be eligible, he said.