Move paves way for halal industry to become asset class
Published Wednesday, April 13, 2011
The halal food industry has now become an asset class within the investment community with the launch of the world’s first halal food indices, called SAMI (Socially Acceptably Market Investments) Halal Food Index and SAMI Halal Participation Index.
The formal announcement of the SAMI Halal Foods Index by Thomson Reuters and Ideal Ratings was made in Malaysia last week, which reflects the development of the Islamic finance and Halal food industries in that country. Ideal Ratings is a San Francisco-based company that provides an equity screening service to Islamic funds around the world.
Both the indices provide a platform for investors seeking Shar’iah-compliant ethical investment opportunities, said Rushdi Siddiqui, Global Head Islamic Finance Thomson Reuters US. The SAMI Halal Food Index comprises 200 companies listed in Muslim-majority countries with a total market capitalisation of over $100b.
Of the 200 companies in the index, almost half (95) are Malaysian with market capitalisation of $53b, while others are from Saudi Arabia, Turkey, Indonesia and Nigeria.
“Previously, we only invested in a company by buying the products that they sell, but now we can invest in the company by buying shares in the company, a way that will help halal producers to grow their business,” Rushdi said.
Currently, he said 80 per cent of the halal food products were produced by non-Muslim countries and consumed by most of the Muslim countries.
“The global halal food industry, estimated at $661b and growing at 20 per cent annually is completely under-served and needs tools to support current growth.
“The SAMI index will be the bridge builder for Islamic funds, exchange traded fund investing and Sukuk issues as well as for global non-Islamic investors interested in the emerging food sector markets, a non-cyclical and therefore lower risk sector,” he added.