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S&P Launches Shariah-compliant global property and pan-Arab indices

Standard & Poor’s has launched three Shariah-compliant indices covering the pan-Arab region and publicly traded property companies in developed and emerging markets, providing investor

Standard & Poor’s has launched three Shariah-compliant indices covering the pan-Arab region and publicly traded property companies in developed and emerging markets, providing investors with an investible portfolio while adopting explicit selection criteria defined by Islamic law.

The S&P/Citigroup Global Property Shariah Index, which represents and measures the investible universe of publicly traded property companies from developed and emerging markets, comprises 130 companies from 26 countries with an adjusted market cap of USD231bn.Significant countries represented include the United States (19.54 per cent), Australia (19.19 per cent), China (11.14 per cent), Hong Kong (10.53 per cent) and Japan (9.80 per cent).

The S&P/Citigroup World Property Shariah Index is a sub-set of the S&P/Citigroup Global Property Shariah Index and includes property companies from developed markets only, comprising 89 companies from 16 countries with an adjusted market cap of USD191bn.

Significant countries represented include the United States (23.63 per cent), Australia (23.21 per cent), Hong Kong (12.74 per cent), Japan (11.85 per cent) and France (10.59 per cent).

The S&P Pan Arab Shariah Index contains 129 stocks from listed companies in 11 countries – Bahrain, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Tunisia and the United Arab Emirates.

Saudi Arabia (48.24 per cent) and Kuwait (20.07 per cent) are the two biggest country constituents, while financials (35.92 per cent), materials (26.67 per cent) and telecom services (19.24 per cent) are the biggest sector constituents. Constituent companies include Al Rajhi Banking & Investment, Saudi Arabian Basic Industries Corporation, and Mobile Telecommunications Company.

‘The launch of these three new indices is another important development in the roll-out of our range of fully-investible Shariah-compliant indices,’ says Alka Banerjee, vice-president of Standard & Poor’s Index Services. ‘We want to provide Shariah-compliant investors with access to important asset classes such as property and real estate, along with key geographical sectors like the pan-Arab region.’

All S&P Shariah Indices are screened by Ratings Intelligence Partners, a Kuwait-based consulting company specialising in the Islamic investment market. Ratings Intelligence Partners researchers interface directly with a dedicated Shariah supervisory board made up of Islamic scholars whose role is to interpret business issues as well as financial practices and recommend actions in relation to Shariah index management.

S&P Shariah Indices exclude businesses that offer products and services considered unacceptable or non-compliant according to Shariah law, including advertising and media, alcohol, financials, gambling, pork, pornography, tobacco, and the trading of gold and silver as cash on a deferred basis. All S&P Shariah index constituents are monitored on a daily basis to ensure that the indices maintain strict compliance.

Standard & Poor’s Index Services maintains a wide variety of investible and benchmark indices including the S&P 500, an index with USD1.3trn invested and USD4.8trn benchmarked, and the S&P Global 1200, a composite index comprised of seven regional and country headline indices. Standard & Poor’s, a division of the McGraw-Hill Companies, is a global provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data, with some 8,500 employees in 21 countries.

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