Global Investment House “Global” announced today the launch of its new GCC Islamic Index, part of Global’s series of indices, leveraging the need to track the performance of Shari’a-compliant companies in the region.
Mr. Omar M. El-Quqa, CFA, Executive Vice President at Global, said, “We take pride in introducing the first dedicated Islamic Index for the GCC region. Global GCC Islamic Index establishes itself as the benchmark for Shari’a compliant investment in GCC countries, introducing the immense Shari’a compliant investment opportunities available in our regional market.”
“Islamic finance has become one of the most dynamic growth areas in international finance. This new index leverages the need for tracking the performance of Shari’a-compliant stocks in-line with the great interest the investors are showing in this market,” he added.
Muslim societies have always looked to means of conducting their banking and investment affairs according to the Shari’a, the sacred law of Islam. Today, there seems to be a growing interest in Islamic Finance even in such parts of the globe as <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Europe and North America, where Muslims are a minority. Moreover, in the Middle East, Islamic Finance may become a way of life.
A recent study illustrates that the Asia-Pacific region looks promising as well, following estimates that Islamic banks will account for 40 percent to 50 percent of total savings of the Muslim population worldwide within the next eight to ten years.
Financial reports of all listed GCC companies have been screened for Shari’a-compliance, and only those companies engaged in business in conformity with the principles of Islamic Shari’a were included.
As for what qualifies as a Shari’a-compliant stock, Mr. El-Quqa explained that Islamic institutions are those that are based, in their objectives and operations, on Shari’a principles. They are thus set apart from "conventional" institutions, which have no such preoccupations,” he said. “For this index, the company’s article of association has to mention that all financial activities are governed by Shari’a-complaint principles.”
“Hence, Global composed a special index to track the performance of the Islamic Shari’a compliant companies under the name of “Global GCC Islamic Index. The index tracks the performance of those companies as a distinctive and integral part of the GCC region as a whole.”
Such an index should help in enhancing the market, as it will work side-by-side on developing more interest among foreign and local investors that are targeting Islamic compliant companies and direct them towards those stocks, Global EVP affirmed.
Global GCC Islamic Index comprises of all Shari’a Compliant stocks listed on all GCC bourses, currently 66 companies.
The market capitalizations of the companies included in the index are converted into US Dollars using the applicable exchange rates. The index is maintained according to a transparent methodology that is consistent with that of the Global Kuwait Stock Exchange Indices, i.e. a 100% market capitalization weighted index following the formulae of the International Finance Corporation (IFC).
Inception of Global GCC Islamic Index goes back to December 31, 1999 (Base=100). Adjustments according to corporate actions are made as they occur.
Mr. El-Quqa pointed that, “in the future, newly listed companies on the stock markets that meet Shari’a Compliance criteria, will be added to the index on listing date to ensure that the index reflects the actual market conditions.”
Table 1: Annual Performance of Global GCC Islamic Index:
|
Index |
2001 |
2002 |
2003 |
2004 |
2005 |
1H2006 |
|
Global GCC Islamic Index |
10.72% |
1.04% |
4.92% |
53.77% |
86.71% |
70.77% |
Since the inception of the index year up till June end, the index managed to achieve a positive annual performance. Table (1) shows that as per Global GCC Islamic Index, Islamic Companies market grew by a whopping 70.77 percent during the first half of the current year. The highest annual increase was in the year 2005 as the index rose 86.71 percent. Meanwhile, Global GCC Islamic Index has gained 586.26 percent since its inception in December 1999 until the end of June 2006.
Table 2: Country’s market capitalization share in Global Islamic Index (as on end of June 2006):
|
Country |
Market Capitalization (US$) |
% of total market capitalization |
|
|
Investors will be able to track Global GCC Islamic Index official trading days (Saturday – Thursday) on Reuters’ screens <GLOO> and Bloomberg . Also historical performance since inception can be viewed on Global’s website: www.globalinv.net.
Global Investment House “Global” is a full-fledged investment company incorporated in 1998, and falls under the regulation of the Central Bank of Kuwait. Its underlying foundation is to meet the high expectations of local and international clients, and to enhance the investment service industry in Kuwait and the region. Today, Global stock lists on the Kuwait, Bahrain, and Dubai Stock Exchanges, with branches and affiliates in Bahrain, Dubai and Abu Dhabi (UAE), Jordan, Qatar, and Sudan. Global plays an important role in promoting investment opportunities in the Arabian Gulf Peninsula to investors through expert financial engineering, in-depth research and reports to advance the capital market in the region. Thus, Global’s achievements have been recognized on local, regional, and international levels. The company’s current assets under management reached KD1.9 billion (USD6.7 billion) on June 30, 2006.
