GCC stock markets need more sophisticated tools


Robert A Shakotko, Managing Director, S&P Indices Services and Alka Banerjee, Vice-President, Global Equities at S&P in a panel interview told Bahrain Tribune that the development of the GCC stock markets need more sophisticated tools and mechanism especially in the background of shift in focus of the investors.

Robert said: “In the backdrop of excess liquidity and regulators resolve to broaden the base of the capital markets by introducing more sophisticated tools are seen as a major step forward by a global rating player like S&P.

“The GCC capital markets have a huge growth potential as the global rating agencies like Standard & Poor’s with 12,000 indices and clientele in over 80 countries is keen to enhance its market share in the region by offering innovative products and services.”

In this context, he maintained, that the indices are crucial and make a substantial contribution in the broader development of the markets.

“We look at China, India, Russia and Middle East as emerging markets and without any exaggeration, these markets are getting more sophisticated markets. To many GCC markets are fragmented but still offer very bright prospects of growth. As part of a strategic move, Robert said, S&P agreed to play an important role to offer all possible services to the upcoming companies, investment banks and brokerage houses in the GCC.

Robert and Alka, who were in Bahrain as part of their GCC-wide visit to meet the clients and officials with regard to their latest three new global Shariah indices, were upbeat about the success of S&P indices.

Standard & Poor’s announced the launch of three new indices designed to meet demand from Islamic investors for investable access to some of the world’s most popular investment strategies. The three indices launched today are S&P Global Infrastructure Shariah, S&P Global Healthcare Shariah, and S&P/IFCI Large-MidCap Shariah. “Muslim investors around the world have growing appetite for investable sector and thematic solutions that have been screened for Shariah-compliance,” said Alka Banerjee.

She added: “The launch of these three global indices is another example of Standard & Poor’s commitment to meeting the increasingly sophisticated needs of Muslim investors.”

The S&P Global Infrastructure Shariah index is designed to provide liquid and tradable exposure to 20 companies from around the world that represent the listed infrastructure universe while adopting explicit selection criteria defined by Islamic law. The universe is drawn from the S&P Global Infrastructure Index, and has three distinct infrastructure clusters: energy, transportation, and utilities.

The S&P Global Healthcare Shariah is comprised of companies in the S&P 500, S&P Europe 350, and S&P Japan 500 Shariah-compliant indices sit in the GICS Health Care sector. As of September 30, 2007, there are 72 companies in the index with an adjusted market capitalization of $ 2.1 trillion.
The Shariah index is a subset of the S&P/IFCI Composite Index, and includes 90 per cent of the market capitalisation of the parent S&P/IFCI Composite Index.

The five Arab shariah country indices: Egypt, Jordan, Lebanon, Morocco, and Tunisia. These underlying country indices are part of the S&P/IFCG emerging market series. The stocks listed in each underlying country are individually screened for shariah compliance before inclusion in the Pan Arab shariah index.

All S&P Shariah Indices are screened by Ratings Intelligence Partners, a Kuwait-based consulting company specialising in the Islamic investment market. Ratings intelligence partners researchers interface directly with a dedicated shariah supervisory board. S&P Shariah indices exclude businesses that offer products and services which are considered unacceptable or non-compliant according to shariah-law, such as advertising and media (newspapers are allowed, sub-industries are analysed individually), alcohol, financials, gambling, pork, pornography, tobacco, and the trading of gold and silver as cash on a deferred basis. All S&P shariah index constituents are monitored on a daily basis to ensure that the indices maintain strict Shariah compliance.



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