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What’s driving interest in Shariah investments?

Walaa AL-Fardan
Walaa AL-Fardan
Senior Content Analyst, Islamic Finance, Refinitiv

The continued growth of the Islamic finance industry has increased the interest of investors to tap into Shariah-compliant investments. How can Refinitiv help Islamic investors and professionals to stay on top of market trends and optimise their Shariah-compliant stock selection in the current markets?

  1. As the Islamic finance industry thrives, there is growing interest in Shariah investments, with a particular focus on environmental, social and governance (ESG) investments.
  2. However, the Islamic finance industry is fragmented, suffering from an inconsistent application of regulations, and this poses problems for those considering Shariah-compliant investments.
  3. Refinitiv’s Shariah screening service updates each month on the list of Shariah-compliant equities to help investors.

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The global Islamic finance industry is growing rapidly, and it is expected to reach $5.9 trillion by 2026, increasing from $4 trillion in 2021 as noted in the Islamic Finance Development Indicator (IFDI) report.

This growth is mainly driven by its biggest segments – Islamic banks and Sukuk – and has simultaneously encouraged investors to tap into Shariah-compliant investments, in particular, investments with environmental, social and governance (ESG) principles.

What obstacles does Islamic finance face?

Even with Islamic finance growing for many years across different markets, it remains a fragmented industry, with uneven implementation of its rules.

The dissimilarity between Shariah schools of thought, hence the various Shariah screening methodologies that are adopted by different market data providers, introduces a key challenge for Shariah-sensitive investors when they make their investment decisions.

Therefore, Shariah-sensitive investors must follow reliable Shariah screening methodology and execution methods, to have true Shariah-compliant portfolios that serve their beliefs.

Discover our Islamic finance services and solutions

Refinitiv Shariah screening methodology

At Refinitiv, we follow a coherent Shariah screening methodology where we base the financial screening ratios on total assets as a divisor, representing the true unbiased value of the company, unlike the Market Capitalization divisor, which is influenced by market price fluctuations, leading to volatile financial ratios.

The Shariah screening service at Refinitiv is powered by our partner Ideal Ratings and provides a monthly updated list of Shariah-compliant equities.

Top Shariah compliant stocks by ESG score

The new Islamic Equity Guide

In addition to Islamic equity markets news and data, a useful new feature has been added to the guide – the quick Shariah screener – which enables users to instantly screen the markets for Shariah-compliant equities from the landing page.

Shariah compliant equities quick scanner

Refinitiv offers access to the Shariah-compliant equities joiners and leavers list, and this is helpful to Shariah-sensitive investors as they will continuously be informed about which companies have entered or exited the list.

Each quarter, around 400 to 800 equities are either added to the Shariah-compliant universe as new qualifiers or are disqualified and excluded from the universe.

Shariah compliant list joiners

A training session on Refinitiv Islamic equities offerings will be held via Refinitiv Academy on 15 November, save the date and join us through this link.

Discover our Islamic finance services and solutions


What is the Islamic investments?

As the Islamic finance industry thrives, there is growing interest in Shariah investments, with a particular focus on environmental, social and governance (ESG) investments.