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The Ultimate Guide To Shariah Compliant Stocks in United Arab Emirates (UAE)

Shariah Compliant Stocks in UAE

For those who have been following our blogs for some time now, you already know what Shariah compliant stocks are. For the new readers, we would just like to brief you about what it means for a stock to be Shariah compliant.

All those stocks and investment options that are in line with the teachings of Islam with respect to no connection with Alcohol, Conventional financial services, Gambling, Pork & its related products, pornography, tobacco, Non-Halal Advertising, Media and entertainment – are said to be compliant with Shariah principles.

There has been a rising interest in such Shariah compliant stocks lately.

In other blogs, we have given out a lot of details about Shariah stocks and compliances.

You can read about Shariah compliant stocks in different markets in our blogs below for more information

Today, we will discuss the shariah compliance of stocks listed in the UAE Market. So, before we proceed to the UAE Stock market, let us look at a few key details of the country.

About United Arab Emirates (UAE)

United Arab Emirates or commonly called the Emirates is a Southwest Asian country that shares its borders with Oman, Saudi Arabia, Qatar and Iran. UAE is known as an Islamic country and the national language is Arabic. It is also considered a business hub in the GCC region.

United Arab Emirates ( UAE) consists of 7 states; Abu Dhabi, Dubai, Sharjah, Umm al-Quwain, Fujairah, Ajman and Ra’s al-Khaimah.
The capital of the country is Abu Dhabi. It is the second-largest economy in GCC and is a very lucrative country when it comes to growth, development and wealth.

How Many Stock Exchanges are there in the UAE?

Now that we know a few things about UAE, let us come to the main point of its stock exchanges. There are two main stock exchanges in the UAE and they are the DFM and the ADX

The DFM (Dubai Financial Market) was founded in 2000 and it has 66 stocks listed on DFM and 10 stocks on Nasdaq Dubai. It is regulated and governed by the SCA or the Securities and Commodities Authority. This governing body outlines certain laws and standards that the DFM has to comply with. 

ADX or the Abu Dhabi Securities Exchange, situated in Abu Dhabi is another leading stock exchange in UAE. It was also established in 2000. This exchange got 70 stocks and equities listed. The total number of stocks listed on the 3 exchanges is 146.

These stock exchanges play a vital role to improve the Country’s economy and it is also considered a role model for the Gulf region for other GCC countries like Saudi Arabia, Bahrain, Oman, Kuwait and Qatar.

What is the role of DFM to provide Shariah Compliant stocks in UAE?

1. Being a leading stock exchange in the UAE, the DFM has been very responsive when it comes to Sharia compliance.

2. DFM lists shariah compliant stocks and publishes the list of Shariah Compliant stocks every quarter which you can find here as Sharia Classification List - DFM - 2nd Quarter 2019.  

3. The DFM’s Fatwa and the Shari’a Supervisory Board has prepared a standard to identify these listings.

The Standards take care of the following points to ensure Shariah Compliance:

Shariah parameters for trading, acquiring, issuance and subscription of shares

Acquisition of shares of those companies involved in mixed activities

Excluding the prohibited income

Unlawful transactions in the trading

Nasdaq Dubai which is part of Dubai Financial Market also lists shariah compliant stocks as Sharia Classification List - Nasdaq Dubai - 2nd Quarter 2019.

What is the role of ADX in providing Shariah Compliant stocks in UAE

Just like the DFM, the ADX also has a screening board to list out those stocks that are compliant with the Shariah principles as ADX has published its list of shariah compliant stocks.

Islamicly App will show you the latest and real time shariah compliance information of your stocks. Let us check % of shariah compliant stocks in UAE on the App:

The growth of Shariah Compliant stocks in UAE over the last five years

As per the latest reports, UAE was the leader of Islamic economy in the year 2018. There was a rapid growth of popularity for halal food, halal travel, halal media and recreation, and halal pharmaceuticals. After they introduced Shariah compliance in their stock exchanges, there was a paradigm shift in consumer behavior and there was a surge in the demand for Shariah-compliant finances and products that boosted the stock market in recent times.

Current situation of Shariah Stocks and other products in UAE

The UAE is currently a very promising state for the development of the Islamic banking and financial products. The Islamic banking sector has gained a lot of momentum in the UAE market where the market share has crossed 20 percent and is still growing. While conventional assets are growing at 4-4.5 percent annually, Islamic institutions and products have recorded a growth rate of about 7 percent and are still witnessing an upward move.

Are policies of the government in UAE considered to be encouraging Islamic finance and Shariah based financial products?

Yes. UAE government encourages Islamic finance in the country and has laid down the terms and conditions to implement Shariah Finance regulated by The Dubai International Financial Centre (DIFC). As we already discussed, the UAE government truly understands the essence of investing in Shariah friendly investments and that is why it has been constantly encouraging the Shariah based financial products. Not only was the DFM the first exchange to list Shariah compliant stocks, but even today, it continues to constantly monitor stocks and that is why the investment in the economy has been growing manifolds.

Future of Investing in Shariah compliant stocks in the UAE

With the market only growing upwards, there is a lot of scope for investment in the Shariah compliant stocks in the UAE. The economy has registered tremendous growth in terms of the HALAL stocks and it has been screening and adding more companies to the list.

How Islamicly will help you find shariah stocks for your market in the UAE?

At Islamicly, we are constantly working towards bringing all information related to Shariah under a single roof so that you can browse through all the necessary points before investing in any stocks in any market all over the world. On our app, you can check out the different Shariah compliant stocks on the ADX and the DFM before investing. We constantly update our database so that your investment choices are fully informed and up to date!

Conclusion

This is a brief summary of all the information that will come handy for you when you are looking to invest in any company in the UAE. You can keep coming back to our blog page to know more about other Shariah compliant stocks. For more information, please go through the various sections on our Islamicly app. Need us to write about anything specific? Drop us a message and we will help you out!

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