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Most S&P and Dow Jones Shariah-compliant benchmarks outperformed their conventional counterparts in Q2 and through the first half of 2018 as financials – which are largely absent from Islamic indices – lagged the market by a wide margin, the S&P Shariah Indices & the Dow Jones Islamic Market Indices Scorecard Q2 2018 results which have been released over the weekend revealed.
The report also showed that the Dow Jones Islamic Market (DJIM) World and S&P Global BMI Shariah rose 2.5% and 2.7%, respectively in Q2, outperforming the conventional S&P Global BMI by nearly 200 basis points.
Moreover, the report said the S&P 500 Shariah gained 4.1% year-to-date through June 29 representing the lone major global region in positive territory. The Middle East and North Africa (MENA) equities continued to outperform global markets, driven by rising oil prices and positive investor sentiment in Saudi Arabia. EM equities experienced steep declines due to rising dollar, rising interest rates and trade tensions, the report added.
Meanwhile, DJIM Europe and DJIM Asia-Pacific declined 0.4% and 0.5%, respectively, through mid-year.
In a volatile quarter, emerging market equities experienced steep declines as US dollar strength, rising interest rates and trade tensions weighed on investor sentiment. The DJIM Emerging Markets Index lost 3.1% through mid-year – representing the weakest performance amongst major regions.
MENA equities continued to outperform global markets as the S&P Pan Arab Composite Shariah gained 3.8% in Q2 and 12.3% year-to-date, driven by rising oil prices and unique strength in Saudi Arabia where equity market reforms and expectations of foreign investor inflows have buoyed markets.
However, the Dow Jones Sukuk Index declined 0.3% during Q2, returning -0.2% in the latest 1-year period.
In multi-asset indices, the DJIM Target Risk Conservative and the DJIM Target Risk Aggressive each gained 0.3% and 2.5% respectively during Q2, illustrating the varied exposure to Shariah-compliant equities and Sukuk for each risk profile.
The Shariah scorecard includes both S&P Shariah Indices and Dow Jones Islamic Market Indices, and is released on a quarterly basis: The S&P Shariah indices provide investors with a comprehensive set of Shariah-compliant investment solutions. The series includes developed, emerging and frontier benchmarks, regional, and country investable indices in addition to indices in specific strategy, property, infrastructure, and health care sectors. The widely used S&P Pan Arab Shariah Index family includes versions designed for both local and international investors; The Dow Jones Islamic Market Index series includes thousands of broad-market, blue-chip, fixed-income and strategy and thematic indices that have passed rules-based screens for Shariah compliance. Launched in 1999, DJIM World was the world’s first global Shariah-compliant benchmark.
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The Gulf Today