An index underpinned by the Islamic system of financial management

Transcription

1 An index underpinned by the Islamic system of financial management MARKET DATA Indices Shariah All Share Johannesburg Stock Exchange

2 The Islamic system of financial management is faith-based, underpinned by the Qur anic proscription on riba (interest) and gharar (intentional incomplete disclosure or uncertainty). These Islamic financial products such as banking, mortgages, equity funds, fixed income, insurance, project finance, private equity and derivatives have grown considerably over the last 3-4 years. As such, a core component of the Islamic system of financial management is Shariah-compliance. There can be no compromise on Shariah compliance, otherwise the product or service may not be deemed as acceptable. Islamic finance is no longer only available in Muslim countries but also to some of the world s biggest financial institutions seeking to invest in the emerging markets. A growing interest from investment banks, hedge funds and even pension fund managers exists, therefore necessitating a neutral benchmark. For this reason, the Africa Series is being enhanced with the launch of the Shariah All Share, the first index of its kind in South Africa. This index is designed to track the performance of companies by full market capitalisations, whose activities are consistent with Islamic Shariah law. The index series is calculated by FTSE and the screening is then undertaken by Shariah consultants, Yasaar Research Inc., against a clear set of guiding principles. Yasaar s panels of high-profile Shariah scholars have extensive market expertise in all of the world s major financial centres. Screening Methodology Business activity screening Financial ratios screening Initially, companies involved in any of the following activities will be filtered out as non Shariah-compliant: > > Conventional Finance (non-islamic Banking, Finance and Insurance, etc.) > > Alcohol > > Pork-related products and/or non-halal food production, packaging and processing or any other activity related to pork and/or non-halal food > > Entertainment (casinos, gambling and pornography) > > Tobacco > > Weapons, arms and/or defence manufacturing Financial ratios screening The remaining companies are then further screened on a financial basis. The following financial ratios must be met for companies to be considered Shariah-compliant: > > Debt is less than 33% of total assets > > Cash and interest- bearing items are less than 33% of total assets > > Accounts receivable and cash are less than 50% of total assets > > Total interest and non-compliant activities income should not exceed 5%of total revenue 2

3 Features > > Impartial: By partnering with Yasaar Ltd., an impartial consultancy and leading authority on Shariah, the structure of the Shariah All Share remains neutral and fully up-to-date with latest practices > > Fatwa-certified: The Shariah All Share as part of the FTSE Shariah Global Equity Series has been fully certified as Shariahcompliant through the issue of a Fatwa (Islamic legal opinion) by Yasaar s principals. To view this document visit > > Asset-based debt screening: Unlike other competitor methodologies, a more conservative approach to Shariah compliance is ensured by rating debt ratio limits that are measured as a percentage of total assets, rather than more volatile measures that use 12-month trailing market capitalisation. This ensures that companies do not pass the screening criteria due to market price fluctuation, allowing the methodology to be less speculative and more in keeping with Shariah principles > > School-neutral: Yasaar Research Inc. scholars represent all of the major Shariah schools of thought, creating a best practices approach that has credibility across all regions of the Islamic world Daily data services useful links in the chain The following data product files are available for the Shariah All Share : Live Data Service This service provides subscribers with the intra- day index values (Real-time index calculated every 60 seconds) via InfoWiz. End-of-day Data Products This service provides subscribers with the following end-of-day data files which are produced in a flat file format and are available for download directly from the JSE via File Transfer Protocol (FTP). These files are subscribed to as a packaged product namely, valuations, constituents and tracker (including five-day tracker). > > Valuation Data Service This service provides subscribers with a file containing index level data. It provides the end-of-day capital and total return index values, the index code, index market capitalisation and number of constituents. The file also contains information on the ex dividend adjustment for the day (XD Adjustment) as well as the XD adjustment for the year-to-date, along with the actual dividend yield of the index. > > Constituent Data Service This service provides subscribers with a file which contains information on all the index constituents, inter alia, the constituent name, the ISIN and exchange code, the closing price, the total market capitalisation, the investable market capitalisation (the total market cap adjusted for free float), the number of shares in issue and the percentage weight of the constituent in the index. > > Tracker Data Service This service provides subscribers with a file highlighting corporate actions and constituent changes that will be implemented that evening, effective for open the following trading day. The service is designed to give users forward notice of corporate events and index changes, allowing them to plan for and implement any changes to their own investment products in a timely fashion. The file is split into three sections. Islamic finance is now available to some of the world s biggest financial institutions seeking to invest in the emerging markets First section Level Data, contains index changes to the number of constituents in the index, the market capitalisation of the index, index divisor, as well as the XD adjustment figure. 3

4 Second section Company Level Data, contains changes to the industry classification of the company, the closing shares in issue and the new shares in issue, the closing investability weighting used in the index calculation and the new investability weighting, and changes to the closing price. There is also an indication of whether a secondary line related to the company has been included in the calculation, and further amendment notes to give details of any housekeeping changes such as changes to the constituent name, a constituent addition or deletion, or a change to the ISIN. Corporate actions such as capital repayments, capitalisation issues, rights issues, subdivisions, complex corporate actions, consolidations and share changes will also be detailed in notes for the service user. Third section Dividend Information at Constituent Level, contains the ex-dividend date, the dividend amount, the ISO currency code for dividend payment, the XD adjusted values, and a FTSE dividend code to indicate the type of dividend issued (e.g. final dividend or interim dividend). > > Five-Day Tracker Service This service provides users with a rolling five-day preview of upcoming corporate actions and company changes. It includes constituent changes such as name changes, investability weight changes and corporate actions such as capital repayments, rights issues and share changes. Information a transparent matrix Launch 12 November 2007 Base Date 22 September 2003 Base Value 1000 Investability Screen Free float adjusted, liquidity and Yasaar screened Currency ZAR Rules Historical Data From 22 September 2003 Africa Series linked for diversity Series Headline Indices All Share Industry Indices Secondary Market Indices Specialist Indices Indices All Share ** Top 40 ** Mid Cap Small Cap Fledgling STYLE Value Growth Sector Indices Resources 20 Industrial 25 Financial 15 Financial& Industrial30 Sub-sector Indices* Gold Mining AltX Development Capital Market Venture Capital Market AltX 15 Financials Industrials Property Unit Trust Property Loan Stock Industrial SA Resources SA Listed Property Industrials Resources Financials Dividend+ Tradable **Capped and Shareholder Weighted Indices are also available. * Only 5 sub-sector indices that make up the mining sector are calculated. Note: Africa Series also includes the Namibia Indices. RAFI 40 Shariah All Share 4

5 Shariah All Share Performance (ZAR total return) level Rands TRI Rands 09/22/ /22/ /22/ /22/ /22/ /22/ /22/ /22/ /22/ /22/ /22/ /22/ /22/ /22/2008 Shariah All Share : Top 10 constituents Rank Security ICB Sector Net Market Cap (ZARmn) Shariah All Share Weight (%) % Weighting within Sector 1 Anglo American Mining 669, % 36.78% 2 BHP Billiton Mining 568, % 31.22% 3 Anglo Platinum Mining 116, % 6.42% 4 Sasol Oil & Gas Producers 251, % % 5 Compagnie Financiere Personal Goods 236, % % Richemont AG 6 MTN Group Mobile Telecommunications 229, % 98.84% 7 Impala Platinum Hlds Mining 206, % 11.37% 8 ArcelorMittal South Africa Ltd Industrial Metals 41, % 79.95% 9 Lonmin PLC Mining 11, % 0.66% 10 AngloGold Ashanti Mining 77, % 4.28% Total 2,410, % 5

6 Shariah All Share : Sector breakdown ICB Code Sector No. Constituents Net Market Cap (ZARmn) Weight (%) 530 Oil & Gas Producers 1 251, % 1350 Chemicals 3 15, % 1730 Forestry&Paper 1 9, % 1750 Industrial Metals 4 52, % 1770 Mining 16 1,820, % 2350 Construction&Materials 6 66, % 2720 General Industrials 4 33, % 2730 Electronic & Electrical Equipment 2 12, % 2750 Industrial Engineering 2 2, % 2770 Industrial Transportation 2 25, % 2790 Support Services 3 41, % 3350 Automobiles&Parts 1 1, % 3570 Food Producers 4 12, % 3720 Household Goods 1 23, % 3760 Personal Goods 1 236, % 4530 Health Care Equipment & Services 1 6, % 4570 Pharmaceuticals & Biotechnology 2 10, % 5370 General Retailers 3 6, % 5550 Media 1 2, % 5750 Travel & Leisure % 6530 Fixed Line Telecommunications 1 37, % 6570 Mobile Telecommunications 2 232, % 8730 Real Estate 11 86, % 9530 Software & Computer Services 2 13, % Total 75 2,999, % 6

7 Shariah All Share : Portfolio characteristics Attribute Value Number of Constituents 75 Net Market Cap (ZARmn) 2,999,912 Company Size: (Adjusted ZARmn) Average 39,999 Largest 669,548 Smallest 257 Median 4,858 Weight Largest Company (%) 22.32% Top 10 Holdings (% Net Market Cap Share) 80.37% Source: JSE. Data as at Feb 29, For additional information contact: JSE Market Data mdclients@jse.co.za DISCLAIMER: FTSE is a trade mark of the London Stock Exchange Group companies, JSE a trade mark of JSE Limited and both are used by FTSE Limited ( FTSE ) under licence. The Shariah All Share is calculated by FTSE in conjunction with the JSE. Neither FTSE or the JSE sponsor, endorse or promote this product and are not in any way connected to it and does not accept any liability. All intellectual property rights in the index values and constituent list vest in FTSE and the JSE. The JSE has obtained full licence from FTSE to use such intellectual property rights in the creation of this product Compiled: April