France is one of the emerging countries embracing Shariah Compliant Products and halal stocks. The country is in the race to becoming a hub of Shariah based products for Shariah sensitive Investors. France is one among those developed economies that shows promise in promoting Shariah compliant products through Shariah friendly financial system laws. We will talk more about that in this blog as well.
French Readers of this blog and other Shariah investors interested in French listed stocks will be pleased once they explore an app that is committed to providing real time Sharia status of stocks listed in France. Reading this blog till the end will be worth your time and will equip you with a good understanding of the Shariah status of stocks in France.
Shariah Compliant Stocks In France
Many of you might be wondering what Shariah-compliant stocks are. A stock is considered Shariah-compliant if it adheres to Islamic principles and standards. Islamic investors are allowed to invest in stocks that meet these Shariah guidelines.
There are two parameters to filter stocks to keep them in the list of Shariah Equities.
What are those parameters? Let us discuss them in brief here:
1. Business activities filter
Business activities of companies are examined to ensure that either they are not involved in or should have less than 5% revenue from prohibited activities like alcohol, conventional financial services, gambling, pork, pornography, tobacco, un-Islamic adverting activities, un-Islamic media and entertainment.
2. Companies passing the above are also further examined over the financial screening ratios limited by a certain threshold as mentioned below
(i) Cash Compliance Ratio
(Cash + Interest Bearing Securities) / Market value of Equity (36 month average) < 33%
(ii) Receivable Compliance Ratio
Accounts Receivables / Market value of Equity (36 month average) < 49 %
(iii) Debt Compliance Ratio
Debt / Market Value of Equity (36 month average) < 33 %
If a company passes both the tests, it is classified as Shariah Compliant and investment in the stock of such a company is permissible. For detailed Shariah screening criteria please Check Here: Shariah Screening Criteria
Top 5 Stocks in France by Market Capitalization and Their Shariah Status
We also studied top 5 stocks by market capitalization and 3 of them are found to be Shariah Compliant as shown below. This is a positive indication for Islamic investors.
| Company | Market Cap (EUR) | Shariah Compliance | Compliance Risk Factor |
| LVMH Moet Hennessy Louis Vuitton SE | 303.94B | Not Compliant | Not Likely to Turn Compliant |
| Hermes International SCA | 203.22B | Compliant | Not Likely to Turn Not Compliant |
| L’Oreal SA | 197.72B | Compliant | Not Likely to Turn Not Compliant |
| TotalEnergies SE | 147.02B | Not Compliant | Not Likely to Turn Compliant |
| Sanofi SA | 131.22B | Compliant | Not Likely to Turn Not Compliant |
Sector Wise Shariah Compliance in France
| Sector | Compliant | Non-Compliant | Total |
| Consumer Cyclical | 10 | 24 | 34 |
| Consumer/Non-Cyclical | 3 | 20 | 23 |
| Energy | 5 | 3 | 8 |
| Healthcare | 38 | 31 | 69 |
| Technology | 41 | 23 | 64 |
| Capital Goods | 19 | 32 | 51 |
| Basic Materials | 7 | 15 | 22 |
| Financial | 1 | 25 | 26 |
| Utilities | 1 | 6 | 7 |
| Services | 18 | 84 | 102 |
| Transportation | 1 | 9 | 10 |
| Beverages (Non-alcoholic) | 0 | 1 | 1 |
| Biotechnology & Drugs | 0 | 1 | 1 |
| Grand Total | 144 | 274 | 418 |
Upon a review of all stocks listed in France, we found that 34.44% of stocks listed in France are Shariah compliant! These stocks present a good universe for investors wishing to invest according to Shariah principles.
5 Years Shariah Compliance History of Stocks
We have conducted one more interesting study and examined the Shariah compliance history for the last 5 years for stocks listed in France. Let us see the Shariah compliance movement year by year in the below graph.
As you can see there is very minimal change in the Shariah compliance history year by year. It means the number of Shariah compliant stocks in France are stable. This is positive news for Islamic investors as it reduces the compliance risk.
Capital Market In France
NYSE Euronext is the current name of the Paris Stock Exchange that was previously knowns as the Paris Bourse or the Bourse de Paris.
The foundation stone of the stock exchange in France was laid down in 1826 and saw many phases.
The Paris bourse saw a systematic reform in 1980 to regain the business captured by the London Stock Exchange and gradually it built a computer trading system and fully electronic automated trading platform in 1998.
NYSE Euronext is positioned as the seventh largest stock exchange by Market capitalization in the world after New York Stock Exchange, NASDAQ, Tokyo Stock Exchange, London Stock Exchange, Shanghai Stock Exchange and Hong Kong Stock Exchange.
NYSE Euronext And Shariah
In 2008, the French government appreciated the need of the Islamic finance market and the then Minister of economy Mr. Christine Lagarde issued a statement, “We wish to make Paris a better market for Islamic finance, particularly in this background of crisis, credit excess, volatility and cupidity”.
As a result, the French government and capital market authority allowed Sukuk to be promoted to attract Islamic Investors.
The capital market is also believed to be Shariah friendly to some extent and few laws are similar to Shariah Finance.
The notable Shariah Friendly laws are:
1. Contrats de commodat – akin to Mudarabah.
2. Sukuk and Murabaha to be used in tax convention a revolution initiated by the Financial Market Authority in 2007.
3. Interest element is not mandatory in credit and lending in France. Hence, Qard Hasan can be exercised.
4. Payment to Islamic Banker on the basis of profit and loss sharing is feasible. Here Mudarabah based finance and Musharakah based finance can be exercised.
5. Many others laws are influenced by the Islamic finance system too.
It has been observed that the French legal system is in general Shariah friendly.
This is the reason, France is now known as a possible leading emerging market playing a key role in enabling Halal investment options in the European markets.
France is believed to be a potential home for Takaful, Shariah compatible savings, Mudaraba, Sukuk, Ijaraha and Murabaha financial instruments. There is a good demand of Shariah compliant investments including Shariah Compliant REIT and Islamic Banking products for wholesale and retail in France. One of the main reasons behind this encouraging trend in France seems to be the significant Muslim population in France.
About France
The country houses 5.8 million muslims out of a total population of 67 Million – the largest Muslim population among European countries.
The origins of the Muslim population in France comprise of Algeria, Morocco, Tunisia, Turkey, South- Saharan Africa and Middle East. The country is bordered by Belgium and Luxemburg from the north eastern side; Germany, Switzerland, Monaco and Italy from the Eastern side; Andorra and Spain from the Southern side.
How Can Islamicly Help You Find Shariah Compliant Stocks In France?
Islamicly App is your one stop destination that can help you manage your investments in a Shariah compliant manner.
The app gives you the latest Shariah compliance details for stocks in France and worldwide. It enables users to create portfolios, track Shariah compliance status changes, calculates the purging amount (Dividend Purification). You can access forums and participate in stock related discussions as well as general discussions. It also provides current prices of each stock as well as the top gainers and losers in relation to Shariah and much more.
Islamicly also has a web/desktop version that allows you to manage your Shariah compliant investments on the web and has many more advance features. So, what you are waiting for? Download the app or access the web portal.
Do watch what one of the pioneering scholar of Islamic finance says about Islamicly here:
