Malaysia: Halal food index growing at fast pace

Halal food index growing at fast pace and likely to overtake Dow Jones Islamic Index

KUALA LUMPUR: The world’s first halal food index, the Socially Acceptable Market Investments (SAMI) Halal Food, is anticipated to grow even faster than the Dow Jones Islamic Index (DJII) in terms of size, branding and spin-off products.

This index is championed by Thomson Reuters Global head of Islamic Finance & OIC Countries Rushdi Siddiqui in cooperation with Ideal Ratings. It is backed by Thomson Reuters and supported by the World Halal Forum (WHF).

The SAMI Halal Food index and its sister index, the SAMI Halal Participation Index, were launched during the WHF yesterday. Rushdi had also championed the DJII in 1999.

Rushdi Siddiqui says halal is not just about certification

“Looking at how the Dow Jones Islamic Index has grown, I foresee the SAMI index to become a globally recognised index even faster than the DJII. Here, its easier to connect with the investors. Halal is not just about certification. It involves the whole production chain from farm to fork. Even with a big sell-off in markets, the investor still needs to consume. The SAMI index is a consumer non-cyclical sector,” said Rushdi.

Containing over 200 stocks from six sectors with a market capitalisation of US$114bil, 95 of these stocks are from Malaysia.

The biggest Malaysian stocks on the SAMI index are Sime Darby Bhd, Nestle (M) Bhd and Genting Plantations Bhd.

To date, the SAMI index has outperformed several leading global food indexes from March 2010 to March 2011 by 20%, according to IdealRatings.

The SAMI index has initially confined the criteria to those companies from Muslim countries and it will consider including companies from OECD countries including Britain, the United States, Canada, Brazil, France, the Netherlands and others,” said IdealRatings chief executive officer Mohamed Donia.

Rushdi expected more developments to the SAMI index including getting more companies as members and more institutions issuing products as a spin-off of the index.

He said the fact that so many stocks in the SAMI index were chosen from Malaysia put another feather in the country’s cap.

“It would be good if Malaysia Inc would seed a fund off this index,” said Rushdi.