How to Find Shariah Stock Investment

Investing is one of the most discussed topic for everyone, most of Muslims have the added challenge of ensuring of their investments are Shariah compliant. The strict prohibition of interest in Islam makes many conventional investment limits to observant Muslims. Shariah based stock investment is in accordance to the requirements of Shariah laws and the principles of Islam.

There are three basic rules which needed to be adhered to investment from the standpoint of Shariah.

1.      Absence of interest

2.      Potential for ‘unethical concerns’ in the investment mix.

3.      Nature of the contract between the parties involved.

Basics of Shariah based Stock Investment:

For an investment to be HALAL, it must be in equity instead of debt. Investing in equity means having partial ownership by buying shares of the company,  instead investor giving a loan and getting paid interest regardless of how the company does, with equity, the investor shares in the profit if the company does well and shares in the losses if it does poorly. 

The most common way to get equity of a company is to buy its shares on the stock market.  Not every company who is offering its equity through selling shares in the stock market represents a HALAL Investment though. Strictly no investment also in the stocks that engage in short selling and the use of leverage products is Shariah Compliant.    

Shariah based Stock Investment in Pakistan:

If you have the means and the capital, and you really wanted to invest in Pakistan Stock Market, but how do you ensure that your investments are Shariah compliant? Fortunately, Pakistani investors need not to remain concerned anymore, which stocks pass the filter of Shariah compliance.

KSE Meezan Index (KMI-30) is Islamic stock market index in PSX – Pakistan Stock Exchange. In Pakistan thirty companies that have been screened for Islamic Shariah Criteria.  The index was introduced in 2009 and recomposed last from Jan 2018 with the guidance of qualified and well reputed Shariah experts when Shariah compliance of stocks is done.

A stock market index is a measurement of the value of a certain section of the stock market.  What Muslim investors want to know is not the value of that index or how that value goes up or down, but exactly which companies are included in the Islamic index. Even today Pakistani’s or across the world Investors can access Azeetrade.Com a division of AZEE Securities online trade app developed which tells you all the index watches of Shariah Compliant Stocks. Company's stock symbol in the trading app's function will pull up all the list of stocks.  

Such resources make it much easier for Muslims to invest with peace of mind knowing that their investments are Halal.