Islamic Index Market Update: August 2014

Islamic Indices Outperforming Conventional Benchmarks in 2014
Shariah-compliant benchmarks have outperformed conventional indices in 2014 as Financials – which are underrepresented in Islamic indices – have experienced some weakness, and Information Technology, Health Care and Energy – which tend to be overweight in Islamic Indices – have been sector leaders.

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Through August 27, 2014, the Dow Jones Islamic Market World Index gained 7.3%, while the Dow Jones Global Index gained a comparatively modest 6.0%. The effect has been particularly strong in Asia where the DJIM Asia Pacific Index has gained 9.0% year-to-date, while the Dow Jones Asia Pacific has gained just 6.0%. Key U.S and Middle-Eastern Islamic benchmarks likewise experienced similar outperformance.

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Asia Pacific and Emerging Markets Rebound After Weakness in 2013
Regional markets that fared poorly in 2013 – notably Asia Pacific and Emerging Markets – have generally rebounded and outperformed so far in 2014. Following a decline of 0.3% in 2013, the DJIM Asia Pacific Index gained 10.7% through August 27. Likewise, the DJIM Emerging Markets Index was up 10.4% over this period, following a loss of 2.2% in 2013.

GCC Markets Power Higher Despite Volatility
Middle-Eastern equity markets have been highly volatile in 2014, but have continued to power higher. The S&P U.A.E Shariah and S&P Qatar Shariah have gained 40% and 52%, respectively year-to-date through August 27 despite seeing sharp temporary drops in excess of 20% in June. Saudi Arabia has also seen strong performance in 2014 as enthusiasm over the expected relaxation of foreign investment restrictions has buoyed the country’s equity market. Through August 27, the S&P Saudi Arabia Shariah Index was up 6.5% for the month and nearly 25% year-to-date in USD terms driving a nearly 25% year-to-date increase in the S&P GCC Composite Shariah.

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