The Egyptian Stock Exchange has launched the EGX33 Shariah Index, Ahmed Elsheikh, Chairman of the Egyptian Stock Exchange announced on 12 June.
EGX33 includes 33 companies the activities of which are consistent with the provisions and principles of Islamic Sharia, Mr Elsheikh explained. They were selected according to a methodology approved by the Sharia Supervision Committee, which boasts a group of Sharia scholars and experts in Islamic economy and jurisprudence of financial transactions. These companies are included in 16 sectors listed on the Egyptian Stock Exchange.
According to Mr Elsheikh, a large number of local, regional and international investors repeatedly requested the launch of a Sharia index on the Egyptian Stock Exchange, owing to their desire to invest in companies consistently aligned with the provisions and principles of Islamic Sharia. He explained that the EGX33 Shariah Index was created by an Egyptian work team.
The Sharia Supervision Committee, Mr Elsheikh said, includes an elite group of scholars of Islamic Sharia, Islamic economy, and jurisprudence of financial transactions, many of whom are from al-Azhar, the topmost authority on Sunni Islam in the world. They combine Sharia science, applications of Islamic economics, and new experiences in the jurisprudence of financial transactions. Moreover, Mr Elsheikh said, they have extensive knowledge of the provisions and laws of the financial market and its tools. Members of the Sharia Supervision Committee include Amr El-Wardani, Secretary of Fatwa at the Egyptian Fatwa House, as the Committee’s Chairman; Ezz al-Din Tahamy, Emeritus Professor of Accounting at Al-Azhar University’s Faculty of Commerce, as Vice Chairman; and Hassanein Abdel-Moneim, member of the Sharia Supervisory Board of several financial institutions.
Mr Elsheikh explained that the start date for calculating the EGX33 Shariah Index is January 1, 2022. Comparing its performance with all the current indices on the Egyptian Stock Exchange starting 2024 until today, EGX33 had the best performance.
The Chairman of the Stock Exchange explained that in order to meet the needs of investors and traders in the market, and for the index to be more reflective of the components of the market and its dynamism, it has been decided that the Sharia index companies will be selected from among the EGX100 index companies, in addition to companies that have a Sharia supervisory board, provided that they meet a threshold below the liquidity standards accepted by the Sharia Supervisory Committee for the index, as well as meeting all qualitative standards applicable to other stock market indices.
Mr Elsheikh explained that the EGX33 Shariah Index will have specific weights; the maximum weight of each company within the index has been set at 15 per cent, in line with the requirements of market parties.
According to Amr al-Wardani the Sharia Supervision Committee applies a set of Sharia controls when selecting EGX33 Shariah Index companies, the most important of which is that the company’s activities do not conflict with the provisions and principles of Sharia. A set of other controls are also taken into account, Dr Wardani pointed out. These include the ratio of revenues from the company’s incidental activities to its total revenues; the ratio of liquid assets to the company’s total assets; and the ratio of the value of interest-bearing investments to the company’s total assets or to the average market value of the company, whichever is greater.
Watani International
12 June 2024