The Hindu Business Line : S&P launches Shariah index for BRIC nations

S&P offers Shariah-compliant versions of its 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.

Kolkata May 23 Standard & Poor's has expanded its set of Shariah indices to include India and the other BRIC nations.

The rating agency has announced the launch of S&P BRIC Shariah Index, which is aimed at capturing the largest and most liquid stocks in Brazil, Russia, India and China that meet the criteria of Shariah-law and that currently trade on developed market exchanges such as the Hong Kong Stock Exchange, London Stock Exchange, Nasdaq and NYSE.

S&P already offers Shariah-compliant versions of its 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.

Shariah Compliance

"Each of the constituents within the S&P BRIC Shariah Index is liquid and completely hedgeable. As a result, we are already seeing clients create mutual funds and structured products based upon the index," Ms Alka Banerjee, Vice-President of S&P's Index Services, has been quoted in a press release.

Constituents are screened for Shariah compliance based upon proprietary sectoral and financial ratios. 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 comprises 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, it is mentioned.

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 analysed individually), alcohol, financials and gambling, the press release pointed out.

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