S And P Launches Pan-Asian Shariah Index

by Carla Johnson, Investors Offshore.com

29 June 2007

Standard and Poor's has announced the launch of a fully investable Pan Asia Shariah Index, the latest addition to its Global Shariah Index Series.

The new index, which draws stocks from nine Asian markets in the S&P Citigroup Global Equity Index, will enable Islamic investors to benchmark their investment on a regional basis, and give product providers the opportunity to develop structured products tailored to the Islamic market. The countries eligible for inclusion are China, Hong Kong, India, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand. Australia, Japan and New Zealand are excluded.

"We are delighted to be able to offer a fully-investable Pan-Asian Shariah compliant index," stated Alka Banerjee, Vice President of Standard & Poor's Index Services. "The launch builds upon the success of our other indices launched during the past six months as part of the S&P Global Shariah Index Series. Standard & Poor's approach is to create meaningful, product-based indices that give Islamic investors exposure to the same headline markets that conventional investors have enjoyed for years. The feedback from clients has been very positive, with the indices being used as the basis for new Shariah-compliant mutual funds and structured products."

The number of stocks, for Shariah screening purposes, is limited to the top 15 from each country that have a market capitalization of at least US$1 billion. Each month a range of stocks conforming to these criteria, selected once a year on 31 March, is screened for Shariah compliance to form this index.

The S&P Pan Asia Shariah Index has been launched with 71 companies, with an adjusted market capitalization of US$810.83 billion. Information technology companies represent approximately 35% of the index, followed by telecom services (17%) and energy (15%).

The S&P Global Shariah Index Series already offers Shariah-compliant versions of Standard & Poor's widely used global indices — the S&P 500, the S&P Europe 350 and the S&P Japan 500 — as well as the S&P GCC Middle East Shariah Index Series and the S&P BRIC Shariah Index.

All S&P Shariah Indices are screened by Ratings Intelligence Partners, a Kuwait-based consulting company specialising in the Islamic investment market. Ratings Intelligence Partners researchers interface directly with a dedicated Shariah Supervisory Board. The Board is comprised of a group of Islamic scholars whose role is to interpret business issues as well as financial practices and recommend actions in relation to Shariah index management.

S&P Shariah Indices exclude businesses that offer products and services which are considered unacceptable or non-compliant according to Shariah law, such as advertising and media (newspapers are allowed, sub-industries are analyzed individually), alcohol, financials, gambling, pork, pornography, tobacco, and the trading of gold and silver as cash on a deferred basis. All S&P Shariah Index constituents are monitored on a daily basis to ensure that the indices maintain strict Shariah compliance.

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