Dubai Financial Market launches Sharia index

Index will comprise 30 UAE companies, plus 10 firms on the exchange that have dual listings

A visitor holds prayer beads while looking at financial information screens at the Dubai Financial Market (DFM) in Dubai, United Arab Emirates, on Tuesday, Nov. 10, 2015. Dubai's index declined for three straight months after a collapse in the price of crude battered economies in the oil-producing nations of the Gulf Cooperation Council. Photographer: Jasper Juinen/Bloomberg

A new benchmark Sharia index aimed at attracting more Islamic investors to the Dubai Financial Market was unveiled by the exchange on Monday.

The Dubai Financial Market Sharia Index, DFMSI, is made up of 40 companies - 30 based in the UAE and 10 dual-listed firms deemed to be Sharia-compliant, with no single firm making up more than 10 per cent of the index. The index was set at 1,000 points using company valuations as at December 31, 2019 as a base and showed a value of 1,688.52 at the market's close on Monday.

"As the first Sharia-compliant exchange globally since 2007, we are pleased to launch this new initiative that underlines DFM’s active role in the joint efforts to fortify Dubai’s leading position as capital of Islamic economy globally," said DFM chairman Essa Kazim.

"The index enables Sharia-complaint investors and international institutions [to measure] a trajectory of the historical and current performance of DFM’s Sharia-complaint shares compared to other Islamic or conventional indices at the local, regional and international levels.”

The Islamic finance market is forecast to grow to just over $3.8 trillion (Dh13.95tn) in 2023, up from $2.44tn in 2017 according to the State of the Global Islamic Economy report published last year by the Dubai Islamic Economy Development Centre and Thomson Reuters.

Shares included in the index will be updated on a quarterly basis, overseen by DFM's Fatwa and Sharia Supervisory board. Any new Sharia-compliant shares will be considered for inclusion after one month of trading on the exchange.

“We believe that the DFM Sharia Index is a strong push to our efforts to further attract Islamic investments, considering the growing demand from investors across the world for ethical investments that focus on companies adhering to the Islamic Sharia or to any other general values related to sustainability and environment protection,” Mr Kazim added.