The Egyptian Exchange (EGX) has submitted a draft proposal for an Islamic Shariah-compliant index to the central Shariah supervision committee under the General Authority for Financial Supervision. The submission seeks approval for the index’s alignment with Islamic Shariah principles.
According to Daily News Egypt sources, EGX intends to introduce the Islamic index to the market by the end of the first half of this year. The committee is set to review around 30 nominated stocks for their adherence to Shariah principles and the index’s methodology before its inauguration. The methodology for the Islamic Shariah index mandates the exclusion of companies primarily involved in activities deemed non-compliant with Shariah. It also incorporates financial metrics related to lending, borrowing, and liquidity that align with accepted Shariah standards, alongside liquidity and trading measures to ensure the activity of companies listed on the index.
The EGX’s goal with this index is to draw investors interested in Shariah-compliant companies, attract substantial Gulf investment funds, and expand the range of financial instruments offered.
Islamic product investors typically avoid firms that engage in interest-based financing, which is often viewed with suspicion of usury or considered impermissible in Islamic teachings.
The central Shariah supervision committee’s membership includes notable divs such as Nasr Farid Wasel and Ali Gomaa, both former Grand Muftis of Egypt, Mohamed Abdel Rahman El-Dewini from Al-Azhar, Abbas Abdullah Shouman, ex-Al-Azhar representative, and Sayed Abdel Fadil, Deputy Head of the Capital Market Operations Sector at the Financial Regulatory Authority.—Zawya
