Dow Jones creates Shari'ah-compliant index series for GCC nations

By Devika Patel

Knoxville, Tenn., Aug. 18 - Dow Jones Indexes announced that it has launched an additional set of conventional and Shari'ah-compliant indexes measuring the performance of stocks listed in the Gulf Cooperation Council, or GCC, Middle East and North Africa.

The Dow Jones GCC index, Dow Jones GCC Islamic Market index, Dow Jones GCC Titans 50 with Saudi index and Dow Jones Islamic Market MENA index include companies from all six member states of the GCC, which are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

The Dow Jones Islamic Market MENA index also includes Egypt, Jordan, Morocco and Tunisia.

The Dow Jones Islamic Market GCC and the Dow Jones Islamic Market MENA indexes are part of the Dow Jones Islamic Market index series and measure the stock performance of companies that have passed rules-based screens for Shari'ah compliance and exclude companies engaged in the following lines of business: alcohol, tobacco, pork-related products, financial services, defense/weapons and entertainment.

Also excluded are companies for which the following financial ratios are 33% or more: debt divided by trailing 12-month average market capitalization, cash plus interest-bearing securities divided by trailing 12-month average market capitalization and accounts receivables divided by trailing 12-month average market capitalization.

To be eligible for the Dow Jones GCC Titans 50 with Saudi index a stock must have an average daily trading volume of at least $500,000. The three largest companies of each of the six GCC member states are included in the index. The remaining 32 components are selected top-down from the index universe.

The index universe of the Dow Jones GCC index consists of all stocks traded in the six countries in the GCC region. The top 95% of stocks by free-float market capitalization are selected to the index.

The four new indexes are weighted by float-adjusted market capitalization. Back-tested estimated daily index history is available for the Dow Jones GCC Titans 50 with Saudi, Dow Jones GCC and Dow Jones Islamic Market GCC indexes back to Dec. 31, 2003 and for the Dow Jones Islamic Market MENA index back to Dec. 31, 2008.

The Dow Jones GCC, Dow Jones Islamic Market GCC and the Dow Jones Islamic Market MENA indexes are reviewed quarterly, and the Dow Jones GCC Titans 50 with Saudi index is reviewed annually. All four new indexes are calculated in dollars.

As of Aug. 17, 2009, the top five components of the Dow Jones GCC index by float-adjusted market capitalization are Saudi Basic Industries Corp., Al Rajhi Bank, Mobile Telecommunications Co., National Bank of Kuwait and Kuwait Finance House.

The top five components of the Dow Jones Islamic Market GCC index by float-adjusted market capitalization are Saudi Basic Industries, Al Rajhi Bank, Saudi Telecom Co., Alinma Bank and Saudi Arabian Fertilizers Co.

The top five components of the Dow Jones GCC Titans 50 with Saudi index are Saudi Basic Industries, Mobile Telecommunications Co., Al Rajhi Bank, Emirates Telecommunications Corp. and National Bank of Kuwait.

The top five components of the Dow Jones Islamic Market MENA index are Mobile Telecommunications, Saudi Basic Industries, Al Rajhi Bank, Industries of Qatar Co. and Maroc Telecom.

"Dow Jones Indexes is the first and currently only international index provider authorized by Tadawul to use real-time data of the Saudi stock market," the president of Dow Jones Indexes, Michael A. Petronella, said in a press release.

"The new indexes launched today give market participants for the first time access to authorized regional conventional and Shari'ah-compliant indexes that include the widely sought after Saudi Arabian stock market," Petronella continued.

New York-based Dow Jones Indexes develops, maintains and licenses indexes for use as benchmarks and as the basis of investment products.

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