2024/06/12

Egyptian Exchange launches EGX33 Shariah Index

Ahmad El Sheikh, Chairman of the Egyptian Exchange (EGX), announced the launch of the EGX33 Shariah Index. This index features 33 companies compliant with Islamic Sharia principles, selected by a Sharia Supervisory Committee of scholars and Islamic finance experts. Representing 16 sectors listed on the EGX, the index caters to investor demand for Sharia-compliant investment options.

He said that responding to numerous requests from local, regional, and international investors seeking Sharia-compliant investment opportunities, the Egyptian Stock Exchange (EGX) has launched the EGX33 Shariah Index. This new index caters to investors who prioritize companies adhering to Islamic Sharia principles.

The EGX created by an Egyptian work team in issuing successful indices, starting with the EGX30 in 2003, to develop the EGX33. A dedicated Egyptian team with expertise in technical index management, information technology, financial literacy, and public relations played a crucial role in its creation.

The exchange chairman emphasized the expertise of the Sharia Supervisory Committee. This distinguished group combines Islamic scholarship with Islamic economic applications and up-to-date knowledge of Islamic financial transactions. They also possess deep understanding of capital market regulations and instruments. The exchange specifically sought Egyptian scholars affiliated with Al-Azhar due to its long history of Islamic scholarship and its trusted reputation in Islamic finance. Al-Azhar's expertise in Islamic transactions and economics, along with its forward-thinking approach to emerging issues, ensures the committee's adherence to both Sharia principles and economic realities. The chairman further highlighted the key role played by the committee's distinguished members, including Dr. Amr Al-Wardani, the fatwa writer at the Egyptian Dar Al-Ifta, Dr. Ezz ElDin Tahami, a professor of accounting at Al-Azhar University, and Dr. Hassanein Abdel Moneim, a Sharia Supervisory Board member in numerous financial institutions.

Launched in January 2022, the EGX33 Shariah Index has become the top performing index on the Egyptian Exchange year-to-date (YTD) when compared to all other existing indices.

Dr. Amr Al-Wardani explained that the Sharia Supervisory Committee adheres to strict Sharia principles when selecting companies for the index. These principles include ensuring the company's activities comply with Islamic law and considering factors like the ratio of ancillary income to total revenue, the ratio of liquid assets to total assets, and the proportion of both interest-bearing investments and borrowings relative to the company's total assets or average market value, whichever is higher.

The EGX33 Shariah Index is designed to meet investor needs and reflect market dynamics. To achieve this, its constituents will be selected from two pools: companies within the EGX100 Index and those with a Sharia Supervisory Board, provided they meet the index's minimum liquidity standards and adhere to the same quality criteria as other exchange indices.

The index will employ weight capping, limiting any single company's influence to a maximum of 15%. This aligns with investment fund regulations, which restrict holdings in a single company to 15% of net assets and 20% of its outstanding securities. This approach also facilitates the creation of new financial products like index funds.