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MARKET REPORT
Dow Jones Islamic Market Indexes in July: How Stable is the
Global Recovery?
By Gérard Al-Fil
This year’s summer rally was like the sun coming out after a
thunderstorm: sudden and unexpected. It caught many private
investors by surprise, especially those who were on vacation. All Dow
Jones Islamic Market (DJIM) Indexes added value, with the exception
of the DJIM Kuwait Index. To coin a phrase, the world’s stock markets
became a sort of “bullish state within a broken global state”.
East Asia emerged as the clear winner. The DJIM Indonesia Index
posted the largest prot in July (as of the close of trading on the July
27th), closing 14.71% higher at 1009.71 points.
The biggest Muslim country in the world — with a total population of
237 million people — also topped all other Dow Jones Islamic Market
indexes in its year-to-date performance with a very impressive 96.57%
increase.
Indonesia was followed by the DJIM South Korea Index, which added
14.02%, closing at 631.57 points. The DJIM Hong Kong Index posted
the third largest advance and nished at 1,229.24 (up 13.85%),
beneting from positive data provided by China, which reported a 1.2%
higher liquid steel production for the rst half of 2009.
engines now: the US, Europe, Japan and the Emerging Markets, where
40% of the world’s production is being generated.”
Islamic nance is not only concentrated in the Muslim world. It is
an international phenomenon. On the 27th July, Dow Jones Indexes
announced it had extended its Shariah stock market universe by 11
countries, among them, the very important Saudi Arabia. Riyadh’s
Tadawul market accounts for nearly half of the entire market
capitalization of all GCC stock exchanges (Saudi Arabia, Kuwait, Qatar,
Bahrain, United Arab Emirates and Oman). It also equals nearly 75%
of the entire value traded on these exchanges.
The other 10 markets that were added comprise Islamic as well as
non-Islamic states: Argentina, Colombia, Croatia, Lebanon, Mauritius,
Nigeria, Peru, Serbia, Tunisia and Ukraine. This move increases the
total number of countries in the DJIM Index universe to 68 from 57.
Although oil prices picked up in July by 13% to US$68 per barrel, the
Shariah compliant stocks of the Arabian exchanges could not join the
bullish bandwagon.
The DJIM Kuwait Index hit the bottom of the charts, dropping by 4%
down to 979.77 points. It underperformed even the DJIM GCC Index,
which climbed less than 1% (0.95% to be exact) to 1,359 points.
“The world’s stock markets
became a sort of bullish state
within a broken global state”
All Arab oil states were hit badly by the default of two Bahraini bank
subsidiaries in May and June, owned by Saudi families Saad and
Algosaibi. According to the Riyadh daily newspaper, some 100 banks
worldwide lent money to the two institutions.
The growing global demand for basic materials is also reected in the
sector indexes composed of entities which operate within Shariah.
The DJIM Basic Materials Index surged 9.99%, followed by the DJIM
Industrials Index (gaining 8.45%) and the DJIM Consumer Goods Index
(8.21% higher). All sector indexes gained value, with the DJIM Utilities
Index posting the smallest prot (up 2.65%).
According to Credit Suisse Research, not only Chinese, but global
economic indicators continue to improve. However, the US consumer
is not the leading force behind this recovery. Rather, the Swiss bank
states, it is the increasing production in the emerging markets that is
driving this modest recovery forward.
Dr Nasser Saidi, chief economist of the Dubai International Financial
Centre (DIFC) Authority, agrees. “The global economic plane has four
Sources claim that these loans may total some US$13 billion, with the
daily even mentioning an astounding sum of US$40 billion. Investors
must, therefore, be prepared for more surprises such as defaults
linked to the Saad and Algosaibi groups. Consolidation in the world
economy is gaining pace — and it will be painful.
Other risks remain and could threaten the tiny ower called “recovery”.
These range from a continuing global spread of the swine u to a
possible Israeli aerial attack on Iran, which the Israeli government
says is still an option, despite increasing opposition from the Obama
administration.
Gérard Al-Fil reports extensively from the UAE, Kuwait, Bahrain, Qatar,
Oman, Turkey and Iran. He can be contacted at al[email protected].
Next Forum Question
The UAE central bank has directed banks, including Islamic nancial institutions, to take provisions of up to
75% against their exposure to the troubled Saad and Algosaibi groups over two years. Is the central bank being
overcautious? Or is this an indication that the nancial environment in the Gulf could deteriorate even further?
If you would like to air your views on the next Islamic Finance Forum Question, please email your response of between 50 and 300
words to Christina Morgan, Forum Editor, at: [email protected] before Wednesday, 5th August 2009.
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31st July 2009
www.islamicnancenews.com
MARKET REPORT
July 2009 Islamic Markets Measure
Monthly report on the performance of the DJIM Indexes
Based on the close of trading on the 27th July, the global Dow Jones
Islamic Market Titans 100 Index, which measures the performance
of 100 of the leading Shariah compliant stocks globally, gained
7.24% month-to-date, closing at 1895.21. In comparison, the Dow
Jones Global Titans 50 Index, which measures the 50 biggest
companies worldwide, posted a gain of 6.86%, closing at 153.32.
The Dow Jones Islamic Market Asia/Pacic Titans 25 Index, which
measures the performance of 25 of the leading Shariah compliant
stocks in the Asia/Pacic region, increased 7.28%, closing at
1631.58. The Dow Jones Asian Titans 50 Index, in comparison,
posted a gain of 4.69%, closing at 119.55.
Measuring Europe, the Dow Jones Islamic Market Europe Titans 25
Index, which measures the performance of the 25 of the leading
Shariah compliant stocks in Europe, closed at 1883.25, a gain of
8.74%, while the pan-European blue chip Dow Jones STOXX 50
Index gained 9.32%, closing at 2402.88.
The Dow Jones Islamic Market Turkey Index closed at 2567.14, a
performance of 4.56% month-to-date, while the Dow Jones Turkey
Total Stock Market Index closed at 898.65, a gain of 11.54%.
Measuring the performance of Shariah compliant stocks of ve of the
Gulf Cooperation Council (GCC) member states, the Dow Jones Islamic Market GCC Index closed at 1359.32, a gain of 0.95%. The conventional Dow Jones GCC Index was up 1.45%, closing at 1394.92.
Other Markets and Asset Classes
The Dow Jones Islamic Market BRIC Equal Weighted Index increased
8.08%. It had a closing value of 1628.23. By comparison, the Dow
Jones BRIC 50 Index closed at 500.42, a gain of 7.70%.
The Dow Jones Citigroup Sukuk Index, which measures the
performance of global bonds complying with Islamic investment
guidelines, increased 2.90%, closing at 112.58.
Measuring the performance of 50 of the largest Shariah compliant US
stocks, the Dow Jones Islamic Market US Titans 50 Index increased,
closing at 1939.02. It represents a gain of 6.65%. The US blue-chip
Dow Jones Industrial Average increased 7.83%, closing at 9108.51.
The Dow Jones Islamic Market Sustainability Index, which measures sustainable practice business of companies respecting the
Shariah laws, increased 8.95%, closing at 2101.08. The conventional Dow Jones Sustainability Index gained 8.31% with a closing
value of 877.94.
Middle East and GCC Regions
Global July 2009 Industries Winners and Losers
In July, the Dow Jones DFM Titans 10 Index, measuring the 10
largest and most liquid stocks listed on the Dubai Financial Market,
closed at 2361.32. It is a gain of 3.08% month-to-date. The Dow
Jones Islamic Market Kuwait Index posted a loss of 4.00%, closing
at 979.77. Its conventional counterpart index, the Dow Jones Kuwait
Composite Index, was down, closing at 236.13. It represents a loss
of -0.91%.
The three best performing Dow Jones Islamic Market Industry
Indexes were Basic Materials, Industrials and Consumer Goods
with performances of 9.99%, 8.45% and 8.21%, respectively. The
Dow Jones Islamic Market Utilities, Dow Jones Islamic Market
Telecommunications and Dow Jones Islamic Market Health Care
indexes were the three worst performing industry indexes with
performances of 2.65%, 5.25% and 6.30%, respectively.
Asia: Performance of Dow Jones Islamic Market versus Conventional Dow Jones Indexes
Dow Jones Islamic Market Indexes
Index Names
DJIM Asia/Pacic Index
Index Close July 2009
Conventional Dow Jones Indexes
MTD 2009
1141.38
7.12%
DJIM China Offshore Index
2424.69
DJIM Hong Kong Index
1229.24
DJIM India Index
DJIM Indonesia Index
DJIM Japan Index
DJIM Malaysia Index
MTD 2009
Index Close July 2009
5.04%
111.33
12.01%
10.26%
3936.35
13.85%
11.31%
384.05
1388.79
7.12%
5.74%
1475.87
1009.71
14.71%
12.52%
123.98
938.77
4.19%
1.27%
80.14
1210.25
5.9%
7.54%
166.91
Index Names
DJ Asia/Pacic Index
DJ China Offshore 50 Index
DJ Hong Kong Index
DJ India Total Stock Market Index
DJ Indonesia Index
DJ Japan Index
DJ Malaysia Index
Dow Jones-JS Pakistan Islamic Index
8847.27
6.62%
5.94%
513.14
DJ Pakistan Total Stock Market Index
DJIM Philippines Index
1340.32
1.49%
13.01%
145.15
DJ Philippines Index
DJIM Singapore Index
958.68
11.42%
11.25%
228.84
DJ Singapore Index
DJIM South Korea Index
631.57
14.02%
13.28%
197.94
DJ South Korea Index
DJIM Amana Sri Lanka Index
1112.84
2.96%
3.54%
159.94
DJ Sri Lanka Index
DJIM Taiwan Index
3704.66
8.41%
9.51%
133.17
DJ Taiwan Index
DJIM Thailand Index
1252.94
2.6%
3.70%
79.90
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Page 19
DJ Thailand Index
31st July 2009