ISB656

INDEXES IN CAPITAL MARKET

DOW JONES – RHB ISLAMIC MALAYSIA INDEX

FTSE BURSA MALAYSIA EMAS SYARIAH INDEX
FTSE BURSA MALAYSIA HIJRAH INDEX

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 Dow Jones – RHB Islamic Malaysia Index

 was launched on 23 June 2005

 replace the existing RHB Islamic Index, which is the first Malaysian Islamic
index, established since May 1996
 The Dow Jones-RHB Islamic Malaysia Index is broad-based, covering all
stocks in Dow Jones Indexes’ benchmark index for Malaysia that meet
Islamic investment criteria. To be included in the index, companies must
pass screens for industry type and financial ratios.
 Stocks that are excluded from the Islamic index are those of companies that
deal in alcohol and tobacco products, pork-related products, financial
services, the defence and weaponry sector, and entertainment. Also
excluded are companies whose total debt divided by trailing 12-month
average market capitalization is 33% or more; those whose cash plus
interest-bearing securities divided by trailing 12-month average market
capitalization is 33% or more; and those whose accounts receivables
divided by trailing 12-month average market capitalization is 33% or more.

mardz307@johor.uitm
 FTSE Bursa Malaysia Emas Syariah Index

The FTSE Bursa Malaysia Hijrah Shariah Index is

the second index for Shariah investors in the Bursa
Malaysia series.
This is a tradable index screened for international
Shariah requirements
The indices are designed for the creation of
derivatives, index tracking funds, ETFs and
performance benchmarks
Stocks are liquidity screened to ensure that the
index is tradable

mardz307@johor.uitm
FTSE Bursa Malaysia Index Series

mardz307@johor.uitm
Screening Process

mardz307@johor.uitm
 FTSE Bursa Malaysia Hijrah Index

The FTSE Bursa Malaysia Hijrah Shariah Index has

been designed to be used as the basis of
Shariahcompliant investment products that meet the
screening requirements of international Islamic
investors.
Companies in the index are screened by the
Malaysian Securities Commission’s Shariah Advisory
Council (SAC) and the leading global Shariah
consultancy, Yasaar Ltd, against a clear set of
guiding principles.

mardz307@johor.uitm
The companies are not involved in any of the following core
activities:
• Banking or any other interest related activity, such as lenders and
brokerages, but excluding Islamic financial institutions
• Alcohol
• Tobacco
• Gaming
• Arms manufacturing
• Life insurance
• Pork and non-halal food production, packaging and processing or
any other activity related to pork and non-halal food

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 Companies that have the following criteria are also not included in the
index:
1. Companies whose ratios of debt and debt service in combination are
unacceptable and indicative of an inappropriate use of leverage relative
to their assets
2. Companies that have income from cash or near cash equivalents or
inappropriate levels of receivables to assets, the metrics by which
stocks are included or excluded are designed to be in keeping with
Islamic Shariah principles and commonly accepted philosophies
3. Companies whose liquid assets to illiquid assets exceeds the percentage
permitted under Shariah principles and commonly accepted
philosophies
4. Companies whose cash and cash equivalent to total assets exceeds the
percentage permitted under Shariah principles and commonly accepted
philosophies

mardz307@johor.uitm
THANK YOU

MARDZ307@JOHOR.UITM

mardz307@johor.uitm