January 2019 marks the 12th Anniversary of the Hong Kong Islamic Index’s (better known as the ‘HK Islamic Index’ or HKII) inception.
The HK Islamic Index was applauded upon establishment the Chief Operating Officer of the Hong Kong Exchange and Clearing Limited (HKEx) for being the first of its kind in the territory and region.
The HK Islamic Index encompasses 78 select Hong Kong listed companies which have been deemed to be Shariah compliant by its Shariah Advisory Council (SAC) then headed by the Chief Imam of Hong Kong in 2007.
Message from Lord Edwin E. Hitti, President and CEO, of the HK Islamic Index:
“It is a great pleasure for us to celebrate this 12th Anniversary of our HK Islamic Index. I/We truly appreciate the support and cooperation from all who have extended such to us over the years.
The HK Islamic Index is a landmark accomplishment and has been one of the building blocks of Islamic Banking and Finance in the Hong Kong SAR; an essential pillar at asserting and enhancing the SAR’s status quo towards being a gateway for Islamic capitals to the China Greater Bay Area.
The HK Islamic Index promises to remain through its proven stability and performance track record of tremendous value and advantage to investors and constituents alike in light of the Belt & Road initiative potential for years to come.”
That said, please be reminded that using Islamic indices for guiding operations that relate to real transactions is permissible according to Shariah (Islamic law). It is permissible to use indices to determine the magnitude of a certain market or to judge the performance of certain fund managers or estimate the performance and systematic risks of a portfolio of financial papers. It is also permissible to link periodical adjustments of salaries or wages to changes in the level of prices. It is permissible to correlate the remuneration package of a fund’s manager, mudarib’s bonus, variable rent(s) in an ijarah contract and a deferred settlement of a donation to a charitable body with a particular index.
However, trading in indices or making payment or receipt of money based on the index changes without buying or selling the real assets that the index represents, is prohibited by Shariah as it would be considered a form of gambling. On the same basis, it is prohibited to conclude or deal with option contracts that are based on indices or on the index contract multiplier as these transactions deal with wills and intentions rather than real assets or commodities. In developing an Islamic index, Shariah compliance must be adhered to in its components and a Shariah supervisory board must be appointed to conduct periodical reviews and reporting.