Moscow Exchange to launch Russia's first Islamic investment index
The indices are designed to enable Shariah-compliant investors to invest in instruments created in accordance with Shariah principles of financial and other economic activities.
The index is based on the selection of securities of issuers that have passed a verification procedure for compliance with Islamic principles. Issuers are selected by a Shariah Supervisory Board established by Sberinvest Middle East Limited, headquartered in the United Arab Emirates. Sberinvest Middle East Limited also ensures that the securities are screened for compliance with Shariah law.
Igor Marich, member of the Executive Board, Managing Director for Sales and Business Development at Moscow Exchange, said:
"Moscow Exchange's objective is to provide access to the Russian financial market for all categories of investors and provide them with a wide range of investment opportunities. We have created Russia's first index of Islamic investments together with Sber, which we thank for their cooperation and hope that the index will become a benchmark for the creation of new exchange instruments".
Oleg Ganeev, Senior Vice President of Sberbank, said:
"Together with Moscow Exchange, we have presented reliable investment instruments for a vast and important category of Islamic-compliant clients. The new products fit perfectly into Sberbank's global strategy of responsible business conduct: I am confident that 'halal indices' will also be popular with a wide range of investors".
The index of Islamic investments includes securities that have been screened for compliance with the principles of Shariah and also meet the criteria set out in the Moscow Exchange methodology including at least 16% liquidity ratio and at least 5% free float. The maximum weight of any single issuer in the index cannot exceed 12%.
The index cannot include securities of companies whose activities are connected with the sale of alcohol and tobacco products, gambling, speculation, and a number of financial services. In addition to business type restrictions, there is also a restriction on the level of debt of companies and their financial standing.
The Total Return Index also takes into account Shariah requirements for the treatment of dividends. In particular, any portion of the income derived from activities inconsistent with Shariah principles may be paid to a charity and thus cleared. In order to cleanse the dividend, a special coefficient is used to calculate the amount deducted from the income and an investor receives a dividend net of this amount.
The price index is calculated once every 5 minutes during the main trading session on MOEX. The Total Return Index is calculated once a day at the end of the main trading session.
The index calculation methodology is available on the Moscow Exchange website.