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Shariah-compliant equities deliver positive returns in Q2

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Stocks deemed to comply with Islamic law delivered positive returns during the second quarter of 2009, according to Standard & Poor’s.

Stocks deemed to comply with Islamic law delivered positive returns during the second quarter of 2009, according to Standard & Poor’s.

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 30 June 2009. 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 of Standard & Poor’s Index Services, says: "2009 has been a turbulent year for equity markets, however many indices are still delivering positive returns as certain sectors rally despite the downturn. In particular, the S&P Global Benchmark Shariah Index Series has benefited from the recent boost in healthcare and energy stocks. Ironically however, whilst Shariah investors benefited from the indices’ low exposure 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 last quarter."

Mirroring trends in the broader world equity markets, S&P’s Global BMI Shariah Index shows that infotech, energy and healthcare were the best performing sectors within the Shariah-compliant universe in the Q2, 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’s Global Benchmark Shariah Index Series covers 52 developed and emerging markets as well as ten GICS (Global Industry Classification Standard) sectors.

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