
Can preference for Halal stocks change the state of the Halal finance Industry?
The time that we live in, is dominated by a financial system that is ‘interest’ based. For an abiding Muslim, conducting a financial transaction which involves interest is forbidden. This makes the entire financial system unsuitable for Muslim participation.
Don’t despair, there is some positivity around with the emergence of Halal equities as an investment option for Muslims.
Halal equities, though a very basic investment option, can be a strong force in ushering a wider acceptance and availability of Halal finance. Investing in Shariah compliant equities is considered a basic investment option since it is accessible to all and does not have regulatory challenges unlike a Halal finance or banking product. With the advent of Shariah compliant halal stock advisory portals such as Islamicly, investing in an Islamic manner has indeed become quite simple. Just open a brokerage account, check which stocks are Shariah compliant in your access markets on such halal equity apps and invest in them through your stock broker.
Shariah compliant equity investment and the impact on Islamic Banking and Finance
Let us demonstrate this through Halal food.
Muslim food habits are often synonymous with halal food. It is seen that Muslims are very careful about consuming only Halal food. Amongst other factors, this has been the primary factor which led to wide spread availability of Halal food globally. Even in countries where the Muslim consumer isn’t a big proportion of the consumer base, halal food is available predominantly.
This preference for halal food has influenced the market to make more halal food available.
Similarly, as Islamic investments grow in listed companies, the company managements will naturally start taking cognisance of this new investor base. This will hopefully influence the company managements to make business and financial decisions which are acceptable to this investor class. Hence fuelling the demand for Halal finance. This, we believe, can fundamentally change the global demand for Islamic financial products and could act as the much needed catalyst in the growth of the Halal finance industry.
