I have been contemplating for awhile now whether to buy the share of Ngx shares. As a Muslim , my aim is to buy shares that are of Islamic compliance.
I need clarification on if this particular share can be found under halal investment.
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I have been contemplating for awhile now whether to buy the share of Ngx shares. As a Muslim , my aim is to buy shares that are of Islamic compliance.
I need clarification on if this particular share can be found under halal investment.
Let's imagine Mama Ngozi, a hardworking trader in the local market, wanted to invest her money in shares. Now, Mama Ngozi is a Muslim and she wants to ensure that her investment aligns with Islamic principles, which means it should be considered halal.So, what does it mean for an investment to be haRead more
Let’s imagine Mama Ngozi, a hardworking trader in the local market, wanted to invest her money in shares. Now, Mama Ngozi is a Muslim and she wants to ensure that her investment aligns with Islamic principles, which means it should be considered halal.
So, what does it mean for an investment to be halal for a Muslim like Mama Ngozi? Well, in Islamic finance, certain principles are followed to ensure investments are in line with Islamic law. This includes avoiding businesses that deal with things like alcohol, gambling, pork, or other haram (forbidden) activities.
Now, can Mama Ngozi consider investing in the shares of the Nigeria Stock Exchange (NGX) as halal? To answer this, we need to look at what the NGX represents. The Nigeria Stock Exchange is a platform where companies list their shares for people to buy and sell. When Mama Ngozi buys shares on the NGX, she becomes a part-owner of those companies.
In this case, it’s essential for Mama Ngozi to look into the businesses that have listed their shares on the Nigeria Stock Exchange. She should consider whether these companies engage in activities that are compliant with Islamic principles. If the companies operate ethically and do not involve themselves in haram activities, then Mama Ngozi may consider investing in their shares as halal.
Additionally, Mama Ngozi should also look at the financial reports of these companies to ensure they are not dealing with interest-based transactions (riba), as interest is forbidden in Islamic finance.
In conclusion, Mama Ngozi can consider investing in shares listed on the Nigeria Stock Exchange as halal if the companies are Sharia-compliant and operate according to Islamic principles. It’s important for her to do her research and make informed decisions based on her beliefs and values.
See lessThere is an important distinction here: the Nigerian Exchange (NGX) and Nigerian Exchange Group Plc (NGXGROUP) are not the same thing. NGX is the exchange where shares are traded, while NGX Group Plc is a listed company that owns/operates businesses connected to the Nigerian capital-market infrastruRead more
There is an important distinction here: the Nigerian Exchange (NGX) and Nigerian Exchange Group Plc (NGXGROUP) are not the same thing.
NGX is the exchange where shares are traded, while NGX Group Plc is a listed company that owns/operates businesses connected to the Nigerian capital-market infrastructure.
For a Muslim investor, you should not decide that a stock is halal simply because it is listed on the NGX. The company’s business activities and financial ratios also need to pass the relevant Shariah screening criteria.
Nigeria actually has an NGX Lotus Islamic Index, whose constituents are screened for conformity with Shariah investment principles using a methodology approved by a Shariah Advisory Board. The composition is reviewed periodically, so compliance can change.
For NGX Group specifically, current independent Shariah screening data I found does not classify NGXGROUP as Shariah-compliant. Because this is a religious investment decision, I would still recommend confirming the current status with a qualified Shariah adviser before investing.
If your goal is to invest only in Shariah-compliant Nigerian equities, a better starting point is to examine the current constituents of the NGX Lotus Islamic Index rather than judging individual companies simply because they are listed on NGX.
See lessWhat a fantastic question brother, Yes , some shares listed on the Nigerian Exchange (NGX) can qualify as halal/Shariah-compliant investments, but not every NGX-listed company is halal. The key point is that being listed on NGX does not automatically make a stock halal or haram. You have to examineRead more
What a fantastic question brother,
Yes , some shares listed on the Nigerian Exchange (NGX) can qualify as halal/Shariah-compliant investments, but not every NGX-listed company is halal.
The key point is that being listed on NGX does not automatically make a stock halal or haram. You have to examine the individual company and its financial activities.
A simple way to understand it
Islamic investing generally looks at two things:
1. What does the company do?
The company’s main business should not be based on activities prohibited under Shariah, such as conventional interest-based banking, gambling, alcohol, pork-related businesses, etc.
2. How does the company make and finance its money?
Even if the company’s main business is permissible, its financial structure can still matter. Shariah screening can look at things such as interest-bearing debt, interest income and other financial ratios.
AAOIFI has specific Shariah standards covering shares and securities, including Standard No. 21 on financial papers (shares and bonds).
The good news for Nigerian investors
There is actually an NGX Lotus Islamic Index specifically designed to identify companies that meet Shariah investment principles.
NGX says companies included in the index are screened according to a methodology approved by a Shariah Advisory Board, and the index is periodically reviewed.
Nigerian Exchange Group +1
See lessThere is also a Lotus Halal Equity ETF (LOTUSHAL15) listed on NGX.
Nigerian Exchange Group
So, if your goal is specifically halal investing, you don’t necessarily have to examine every company on NGX from scratch. The NGX Lotus Islamic Index provides a useful starting point.
But there is an important catch
A company being halal today doesn’t necessarily mean it will remain Shariah-compliant forever.
Companies’ businesses and financial statements change.