Are Shariah Stocks A Shelter During Financial Crisis ? - Part 1

Investors looking for a safe haven in turbulent financial markets should consider Islamic equities, according to a recent study.

Restrictions on debt and the diverse investment goals for Shariah-conscious shareholders could help provide a shelter in a time of crisis, academics including Sohel Azad of Melbourne’s Deakin Business School wrote in the November issue of the Journal of International Financial Markets, Institutions and Money. There are also differences in Islamic market structure that mean assets might be slow to respond to the effect of a downturn, they indicated.

“The interplay of these three forces can allow Islamic indices to behave differently from conventional ones, especially during a financial crisis, making them a good hedge,” the authors wrote. “We suggest that during major economic and financial crises, investors could use Islamic stocks to diversify their risks.”

For more details, Find Shelter From Financial Crisis in Shariah Stocks, Study Says

In the next post, we shall look at the performance of FBM indices - Shariah and Non-Shariah.

Source :
1)  www.bloomberg.com