AN INDEX for investors who want to build "sharia-compliant" Australian equity portfolios has been launched in Australia.
It comes ahead of potential changes to federal tax guidelines that could clear the way for Islamic investment products to enter the local market.
The Thomson Reuters Crescent Wealth Islamic Australia Index, launched yesterday, covers more than 140 stocks with a combined market capitalisation of $160 billion. It joins a list of major global Islamic sharemarket indices, including the family of Dow Jones Islamic Market indices, and the FTSE Global Islamic Index series.
It is designed to help foreign and local investors buy shares on the Australian sharemarket without contradicting Islamic investment principles.
To make the index, ASX-listed companies will be "screened" every three months to ensure they do not earn more than 5 per cent of their total revenue from activities considered "non-compliant".
Non-compliant activities include music production and distribution, adult entertainment, alcohol, cinema and broadcasting, gambling, insurance and financial services, pork and tobacco, weapons and defence.
The index favours resource and energy stocks, but the pharmaceutical firm CSL claims the biggest share, with a 10.1 per cent holding.
Woodside Petroleum (9.5 per cent), Origin Energy (8.7 per cent), BHP Billiton (5.1 per cent), and Rio Tinto (4.9 per cent) follow.
The managing director of Crescent Wealth, Talal Yassine, said Australian companies could attract billions of dollars from global Islamic investment funds.
According to Standard & Poor's, Islamic banking assets are worth more than $US1 trillion globally.