By Modupe Gbadeyanka
The Index Governance Committee of the Nigerian Stock Exchange (NSE) has announced an update to the rules guiding the NSE Lotus Islamic Index.
The NSE Lotus Islamic Index is one of the indices created by the stock exchange to track stocks of companies listed on the local bourse that are compliant with Islamic or Shariah laws.
For instance, companies trading their shares on the stock exchange dealing with pork, alcohol, gambling, tobacco, and banks do not qualify to be part of the index.
In a notice to the investing community on Monday, January 6, 2020 and signed by Chairman, Index Governance Committee, Abimbola Babalola, it was stated that the update done on the index removed the limit on the number of constituent stocks in the category.
“The Index Management Committee has updated the index rules for the NSE Lotus Islamic Index and will
remove the limit on the number of constituent stocks in the index commencing January 1, 2020,” the notice said.
“This will enable the NSE Lotus Islamic Index to be more representative of the investible universe of Shari’ah compliant stocks as the market expands,” the notice obtained by Business Post explained.
Last week, the NSE announced a review of the market indices for 2019 and in the new composition, MTN Nigeria and Forte Oil were added to the NSE Lotus Islamic Index, with GlaxoSmithKline, CAP and Presco booted out.
The NSE Lotus Islamic Index helps the Islamic investor community (as well as other interested investors) identify and invest in businesses that are compliant with laws of the religion.
“In a nutshell, this specialty index provides Shari’ah -friendly businesses an opportunity to reach out to more potential investors. The Index also offers Islamic investors a chance to participate in the businesses of the companies included in the index, without compromising their beliefs,” the NSE explained in one of its notes.
