Sber and MOEX present first Islamic investment indices in Russia

Oct 19, 2021

Sber and MOEX announced that they are starting calculation of two new indices at the Russian Islamic Economic Forum: MOEX Shariah Index (MXSHAR) and MOEX Shariah Total Return Index (MXSHARTR).

The indices include securities by issuers who have been verified for compliance with the principles of Islamic economics. Issuers are selected by the Shariah Supervisory Board established by Sberinvest Middle East Limited, which has its headquarters in the United Arab Emirates. Sberinvest Middle East Limited also ensures that the securities are screened for compliance with Shariah law. In the future, Sberinvest Middle East Limited will offer its clients in the Middle East investment products linked to these indices.

The basis for calculating the Islamic investment index includes securities that have passed the verification procedure for compliance with Shariah principles and also meet the criteria established in the methodology: liquidity must be at least 15%, free circulation must not be less than 5%, and the maximum weight of one issuer's share in the index must not exceed 12%. The index includes shares in 15 Russian companies.

The Islamic Investment Index cannot include securities of companies whose activities are related to the sale of alcohol and tobacco products, gambling, speculation, and a number of financial services. In addition to prohibiting certain activities, the index also has restrictions on the inclusion of companies concerning debt and financial situations.

The Total Return Index also takes into account Shariah requirements regarding the treatment of dividends. Income received from activities that are not compliant with Shariah principles can be cleansed by being paid to a charity organization. In order to purify dividends, a special coefficient is used to calculate the amount deducted from the income. The investor then receives their dividend minus this amount.

The price index values are calculated every five minutes during the main trading session. The Total Return Index is calculated once per day at the end of the main trading session. The index calculation methodology is available on the MOEX website.

Oleg Ganeev, senior vice president, Sberbank:

“In collaboration with MOEX, we have presented reliable investment instruments for a broad and important category of clients that adhere to ethical finance principles. These products will be offered to both foreign and domestic retail and institutional investors. We believe that products based on these indices will enjoy high demand due to strong returns on the Russian market and the availability of liquidity for potential clients. The new products complement Sber's global strategy of responsible business perfectly: I am certain that Shariah-compliant indices will also be popular with clients who follow ESG principles.”

Igor Marich, member of the executive board, managing director for sales and business, Moscow Exchange:

“Moscow Exchange’s objective is to provide access to the Russian financial market for all categories of investors and offer them a wide range of investment opportunities. We have created Russia’s first Islamic investment index in collaboration with Sber. We would like to thank them for their cooperation. We hope this index will become a benchmark for the creation of new exchange instruments.”