Ahmed El-Sheikh, Chairman of The Egyptian Exchange (EGX), announced the launch of EGX33 Shariah Index, the index includes 33 companies whose activities came in line with the Islamic Sharia principles. Companies were selected according to an approved methodology by Shariah Supervisory Board, which includes a group of Sharia scholars, experts in Islamic economy, and jurisprudence of financial transactions. These companies represent 16 sectors in EGX.
El-Sheikh said: we received repeated requests from several local, regional and international investors to launch Sharia index as they want to invest in companies whose activities are consistent with the principles of Islamic Sharia. He added: EGX33 Shariah Index was created by a team from EGX professionals capitalizing on EGX’s long history and accumulated institutional experience, of indexes, information technology, and public relations staff, in issuing successful indexes starting with EGX30 Index in 2003.
El-Sheikh stated: Sharia Supervisory Board includes an elite group of scholars of Islamic Sharia, Islamic economy, and jurisprudence of financial transactions. They combine Sharia knowledge, implementations of Islamic economy, and new applications in jurisprudence of financial transactions. They also are familiar with provisions and laws of the financial market. EGX relied on Egyptian scholars of Sharia, jurisprudence, and Islamic economics who are members of Al-Azhar, as Al-Azhar and its scholars have a long history in Sharia sciences, and Al-Azhar name represents trust and reassurance. Al-Azhar has accumulated experience in the jurisprudence of transactions and Islamic economics, as well as a renewed vision for handling new issues according to Sharia.
He added: the backbone of launching EGX33 Shariah Index is the accumulated and diverse experiences of the Chairman of the Board, Dr. Amr El-Wardani - Secretary of Fatwa at Egyptian Fatwa House, and the Vice-Chairman of the Board, Dr. Ezz El-Din Tahamy - Emeritus Professor of Accounting at Faculty of Commerce at Al-Azhar University, and Dr. Hassanein Abdel Moneim, member of Sharia Supervisory Board of several financial institutions.
El-Sheikh said that EGX33 Shariah Index’s start date for calculating is January 1st, 2022. Comparing its performance with all the current EGX’s indices year to date, it outperformed all.
Dr. Amr Al-Wardani pointed out that Sharia Supervisory Board applies a set of Sharia rules 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 rules are taken into consideration that are related to the ratio of revenues from the company’s non-main activities to Its total revenue, as well as the ratio of liquid assets to the company’s total assets. Also, 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 higher, as well as, the ratio of the value of interest-bearing debt to the company’s total assets or to the average market value of the company, whichever higher.
El-Sheikh stated; it was our target to meet the needs of EGX investors, and to make the new index more reflective of the market dynamics. Hence, we decided that Sharia index companies to be selected from EGX100 index companies, in addition to other companies that have a Sharia supervisory board, provided that they meet certain liquidity standards accepted by the index Sharia Supervisory Board, and all other standards applicable to other EGX indices.
El-Sheikh pointed out that EGX33 Shariah Index has specific maximum weight of each constituent; 15%, in line with request from market parties. Mutual fund managers wanted a reference index compatible with investment standards in the funds; “The fund’s maximum investment in a single company shall not exceed 15% of the fund’s net assets and shall not exceed 20% of the outstanding shares of that company.” He added: This also allows developing new financial products such as exchange traded funds.
