To meet the requirements of Islamic fund investors the Dhaka Stock Exchange (DSE) announced the launch of its Islamic index, DSEX Shariah Index (DSES). DSE collaborated with S&P Dow Jones Indices in designing the methodologies for the DSES. The index will serve as a Shariah compliant broad market benchmark which measures the performance of the Bangladesh equity market.
Commenting on the launch, Ahsanul Islam, the president of the DSE, said: “Many people and institutions do not want to make investments in the stock market as there are no products reflecting Shariah investment principles. Now they will be encouraged to come to the market.” Ahsanul hopes to entice fund managers and investors from Gulf Cooperation Council (GCC), countries to participate in the Bangladeshi stock market.
Subject to specific conditions, listed stocks under the DSEX will be allowed for placement in the DSES. Companies engaged in non-Shariah compliant activities including non-Islamic financial institutions are ineligible for listing under the DSES. Should an organization’s revenue from non-Shariah compliant activities exceed 5%, it will also be excluded from the Shariah index. According to Ahsanul, only companies which are incorporated, managed and operated in a fully Shariah compliant manner, with a Shariah supervisory board, will be eligible for listing under the DSES.
An investor, individual or institution, will have to pay fees to know the companies under the index, but no one can disclose the names of the companies trading in the index.
“It will be only for self use for taking investment decision,” he said, adding that the index will be rebalanced once every month.
Companies engaged in advertising and media, news or sports channel, newspaper, alcohol, cloning, tobacco, gambling and trading of gold and silver cannot be placed in the Shariah index.
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