Shariah equities deliver good returns

Stocks deemed to comply with Islamic law delivered positive returns during the second quarter of 2009, according to Standard & Poor's, the world's leading index provider. In the recently published S&P Shariah Report , the S&P Global BMI Shariah Index produced returns of 18.93 per cent over the second quarter to June 30. This compares to the non-Shariah Global BMI Index, which returned 23.89 per cent in the same period. The S&P GCC Composite Shariah Index returned 27.65 per cent, beating the S&P GCC Composite Index, which returned 23.65 per cent over the same period. Alka Banerjee, Vice-President, S&P Index Services, said: "The year 2009 has been a turbulent year for equity markets, however, many indices are still delivering positive returns as certain sectors rally despite the economic downturn." In particular, he said, the S&P Global Benchmark Shariah Index Series has benefited from the recent boost in healthcare and energy stocks. "Ironically, however, while Shariah investors benefited from the low exposure of indices to financials last year, as they generally do not comply with Islamic law, they did not benefit from the rally in the conventional financial sector over the past quarter of the year." Mirroring trends in the broader world equity markets, S&P Global BMI Shariah Index shows that infotech, energy and healthcare were the best performing sectors within the Shariah-compliant universe in the second quarter with gains of 20.1 per cent, 19.5 per cent and 16.8 per cent, respectively. Conversely Islamic financials, which are Shariah-compliant, contributed to the strong performance of the S&P GCC Composite Shariah Index. S&P Global Benchmark Shariah Index Series covers 52 developed and emerging markets as well as 10 GICS (Global Industry Classification Standard) sectors. The index is part of S&P's family of Shariah-compliant indices designed to offer a comprehensive set of Islamic investment solutions for both benchmarking and investing activity. S&P's Shariah indices are screened by Ratings Intelligence Partners, an independent Kuwait-based consulting company, which collaborates with the S&P Index Committee to apply a set of independent and objective guidelines for the day-to-day maintenance of each Shariah index. "Standard & Poor's Shariah indices undergo sector and accounting-based screens that exclude businesses that offer products and services, which are considered unacceptable or non-compliant according to Shariah law," said a statement from S&P. Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here .