Investing 101:

Investing at PSX in accordance with Islamic principles of finance

Investors who want to invest in Shariah compliant companies can invest in more than 250* listed companies making up more than 65%* of the total market cap of listed companies on the Stock Exchange. These companies are Shariah compliant and offer investors the option of investment on the Stock Exchange in accordance with Islamic principles of finance.

In Pakistan, the process of Islamisation of the economy was started in 1977 when in light of the recommendations of the Islamic Ideology Council, Government of Pakistan introduced certain changes in the Banking Companies Ordinance and promulgated the Modaraba (Floatation & Control) Ordinance, 1980, to provide a legal framework for an Islamic financial system in the country.

In the 1980s, Pakistan Stock Exchange listed the first Modaraba. Presently, around 24 Modarabas are listed at the Exchange. Subsequent to changes in the Law, various Islamic investment banks and Islamic commercial banks were listed at PSX. In 2008, Pakistan & Meezan Investments launched the Meezan Index (KMI 30 Index). In 2018, Shariah Governance Regulations were promulgated by the Securities & Exchange Commission of Pakistan (SECP). Government of Pakistan encourages Shariah-compliant listed companies by providing tax incentives. In 2020, Meezan Investment Funds launched the first Islamic ETF which was listed at PSX. The Meezan Pakistan ETF (MZNPETF) is the first Shariah-compliant ETF listed on PSX.

Pakistan Stock Exchange offers a wide range of stocks and debt securities which are Shariah-compliant. PSX has indices such as the PSX-KMI All Shares Index comprising of more than 250 companies and the KMI 30 Index as benchmarks to guide investors in their Islamic investment journey. The Meezan Pakistan Index, MZNPI, tracks the Meezan Pakistan ETF. The full list of constituents of the indices is available by clicking on the ‘Constituent Data (PSX Indices)’ option of the Daily Downloads section of the PSX website:

https://dps.psx.com.pk/downloads

PSX also offers Sukuks as Shariah-compliant debt securities as well as Modarabas and Islamic Mutual Funds for investors seeking to invest in Shariah-compliant instruments. Pakistan Stock Exchange is the ideal conduit of investment in Shariah compliant securities. It is no surprise that PSX has been awarded the Best Islamic Stock Exchange Award by Global Islamic Finance Awards (GIFA) for three consecutive years, 2021, 2022, and 2023.

For more information on PSX’s Shariah compliant investment facility, click on:

https://www.psx.com.pk/psx/resources-and-tools/shariah-compliant-investment

*As of September 15, 2023

Disclaimer:

The contents of this article/ blog comprising of information pertaining to financial products, including but not limited to securities, derivatives products, listed companies or companies proposed to be listed on PSX and any content of third parties are strictly of a general nature and are provided for informative and educational purposes only. Such content/ information is not intended to provide trading or investment advice of any form or kind and shall not under any circumstances be construed as providing any recommendation, opinion or indication by PSX as to the merits of the said product, security or company and also not be interpreted as comprehensive and interpretive of all applicable regulatory provisions