Letters to the Editor. Latest Indian Muslim Statements. The Milli Gazette Online. Islamic economists and financial stocks agree that if certain halal are met, it is lawful to invest in the stock market. Any earnings that result from such investments will be halal. The logic behind this argument is that when one purchases shares in a company he actually becomes a shareholder and thus becomes a partner in the business. Thus, this arrangement is akin to the Halal concept of musharakah. However, there are a host of conditions that must be satisfied before one is allowed to invest in stocks. Over and above this, shariah scholars have developed certain financial parameters halal stocks selection. These are mainly related to the capital structure of the company. The purpose of these criteria is to determine the level of involvement of riba interest and gharar uncertainty in the overall business of the company. One should keep in mind that these criteria are the results of modern fiqh scholarship ijtihad and therefore, should be seen to represent the current state of thinking on the issue. In that way, they represent the maximum tolerance levels and not the last word on the subject. In short, if a Muslim investor is contemplating investment in the stock market, he must not only be careful about the profitability but also about the compliance of shariah. These can be done by looking at the nature of business, percentage of income from interest and the financial soundness of the company. While there are a number of stocks available to help understand the financial soundness of a company there are not many that can guide an investor in determining the shariah compliance of a stock. Following screening patterns may be helpful in determining the shariah compliance of stocks. Qualitative Screens There are two types of qualitative screens: Is stocks company in a business that is prohibited or abhorred in Islam? Apart from investment in banking and finance there are a number of business activities that are considered to be prohibited in Islam, stocks thus investing in these kinds of businesses is not something a Muslim would like to undertake such as alcoholic beverages, pork and pork products, tobacco products, gambling, lottery, pornography and adult oriented material, prostitution and drugs etc. Following shariah principles are applicable to investing and trading practices applicable to individual investors as well as Islamic financial institutions: Investible funds must be free of interest based debt: The investor cannot borrow on interest to finance his investments, and therefore cannot trade on margin i. Conventional hedge funds, arbitrage funds, and leveraged buy-out LBO funds are prohibited for Islamic investors as they all borrow heavily in order to finance their investment practices. Prohibition of speculation Unlike conventional investors Muslims cannot base their investment decisions on short-term speculation. They cannot enter the market as speculators but only as investors. There are three types of quantitative screens: Has the company borrowed funds on interest? Interest-related Income Does the company generate any interest or interest-related income? This only includes those companies which do not make earning interest their business, but place their surplus funds in investments that yield trade income. As in the previous case, ideally no income should come from interest-related sources. Monetary Assets To invest in shariah compliant companies, one has to be very careful about company's monetary assets. Accounts receivables and liquid assets such as halal accounts and marketable securities have trade be below the limits fixed by shariah scholars for the investment to be permissible. Day Trading Day trading has little to do with stocks investing. Usually day traders trade the market and halal and sell on short-term price fluctuation normally within one day. For this reason, trade number of Stocks scholars have termed this as closer to gambling and thus it is prohibited. Margin trading is buying stocks using money loaned from the broker. Interest is paid for this loan, and therefore it is prohibited. Moreover this is a very risky and complicated practice, as one can lose more than what he has borrowed. Derivatives - Options and Futures Option is purchasing the right to halal or sell a stock or a commodity at a future date for a fixed price regardless of the then prevailing price in the market. Exercising this option means buying at the price set in the past. Not exercising the option results in the investor paying the option fee. A great majority of scholars are of the opinion that Futures trading is not permitted in Islam. Short selling is borrowing a stock from the brokerage firm and selling it in anticipation that the stock price will further go down. Once the prices are a bit stabilised the stock is purchased back to square up the sale transaction. This transaction involves huge risk that almost has trade upper limits. Moreover, from shariah point of view you cannot sell what you do not posses. The author is PhD in Islamic Economics. At present he is Investment Consultant and Joint Editor Islamic Economics Bulletin. He can be contacted at: Subscribe to the PRINT edition NOW: Delivered at your doorstep, Twice a month Latest Indian Muslim Islamic News. Read books on Indian Muslim Islamic trade only on MG bookstore! Published in the July print edition of MG; send me the print edition Investing in stock market: Islamic Investment Criteria A. Quantitative Screens There are three types of quantitative screens:
Domesticated Animals Their Relation to Man and to his Advancement in Civilization (English) (as Author).
Averting the onset of pollution in any area, be it in air or water or on land, could be the simplest preventive solution.
This is a must see if you want to take advantage of all your VFP knowledge and apply to future frameworks and other languages.