Indonesia Exchange to launch new Shariah-compliant index
The Indonesia Stock Exchange (IDX) is about the launch a new Shariah Stock Index (ISSI) to attract a more diverse range of investors and particularly those in the Middle East. The new index promises to offer a much wider variety of stocks than the 30 currently listed on the Jakarta Islamic Index.
The new index will contain 214 companies at launch, each already listed on the IDX and judged to be compliant in consultation with the Indonesian Council of Ulema (MUI). There will be a compliance review every six months. According to the Jakarta Globe, Shariah-compliant stocks should make up around 43% of the IDX’s total US$398 billion market cap and the list includes companies such as:
palm oil producer Astra Agro Lestari, gold miner Aneka Tambang (Antam), state-owned steel maker Krakatau Steel, vehicle distributor Astra International, consumer goods producer Indofood CBP Sukses Makmur and state telecommunications operator Telekomunikasi Indonesia (Telkom).
Under Islamic law, companies who engage in any business involving alcohol, pork, gambling, speculation or gain money from interest are haram, or forbidden. Lack of current information has restricted many potentially large Muslim investors from putting their money into the stock exchange, both in Indonesia and the Middle East. The ISSI seeks to tap into that increasingly wealthy demographic.
- Could Indonesia overtake Thailand as an auto manufacturer?
- Indonesia to give tax holidays to major foreign investors
- US$4.7bn in major gas projects approved for Indonesia
- Japanese M&A activity and FDI grows in Malaysia
- Indonesia strong enough to cope with ‘hot money’, but still wary
- Google keen on Indonesian market, less keen on local regulation
- More on Indonesia’s entrepreneurial spirit
- Indonesian courier start-up Go-Jek wins fame, prize
- More longer-term investment flows into Indonesia
- BAE Systems looking for Malaysian aerospace partnerships