The world’s first Halal Food Index was launched yesterday at The 6th World Halal Forum (WHF 2011) confirming the strong convergence between the Halal industry and Islamic finance.
These two indexes are named the Socially Acceptable Market Investments (SAMI) Halal Food Index and its sister index the SAMI Halal Participation Index and is compliant with The Accounting and Auditing
Organization for Islamic Financial Institutions (AAOIFI) criteria.
It is championed by Rushdi Siddiqui, Global Head of Islamic Finance & OIC Countries, Thomson Reuters, in cooperation with Ideal Ratings, a leader in Shariah compliant fund management service and The World Halal Forum (WHF).
This initiative was cemented by an agreement signing today, witnessed by former Malaysian Prime Minister, Tun Abdullah Ahmad Badawi and WHF delegates from over 40 countries.
The SAMI Halal Food Index will be governed by an Advisory Board comprising:
- Rushdi Siddiqui as Chairman of Advisory Board
- Abdalhamid Evans, Director, World Halal Forum, Malaysia/UK
- Darhim Hashim CEO, International Halal Integrity Alliance
- Fazal Bahardeen, Founder of CrescentRating, Singapore
- Rafi-Uddin Shikoh, Founder of DinarStandard, USA
- Ishrat Rauf, Founder of Saif-Capital, Sri Lanka
- Ahmad Adam Founder of the American Halal Association, USA
“I wanted to see if there was an asset class that can be explained in a 30 second elevator pitch, where the same ‘man’ would understand on the spot and want to invest immediately. I saw a brochure of a Halal industry conference and sessions on ingredients, stunning, certification and a $640 billion industry, but nothing on Halal as an investing asset class.”“At that point the light bulb went on, and I was transported back to 1998, when the idea of Shariah compliant indexes came together. Why not create a Halal food index that captures those companies and have it available for all investors of the world? A Halal food index would build bridges to Muslim investors, generate Sukuk issuance for financing Halal food companies and the money stays in Muslim countries for the development of the Halal food industry!”
“The Global Halal food industry, estimated at US$661 billion and growing at 20% per annum is completely under-served and needs tools to support current growth. With the current SAMI initiative, the Global Halal Food industry can now be positioned as an investment asset class in its own right; thereby expanding the application of the Halal concept and creating the channel for Muslims and non-Muslims alike around the world to invest in OIC countries’ publicly listed companies whose foods they consume. The food sector globally has witnessed a major asset allocation from several leading investment institutions worldwide,” said Mohamed Donia, CEO of IdealRatings.
The SAMI Halal Food Index is made up of over 200 food-manufacturing companies from the Muslim world, with a combined market capitalization of over US$100 billion. To date, the SAMI Halal Food Index has out-performed several leading global Food indexes during the most volatile time period of March 2010 to March 2011, by 20%, according to IdealRatings data.
“The SAMI Halal Food Index has initially confined the criteria to those companies from Muslim countries only, and will consider including companies from OECD countries including UK, US, Canada, Brazil, France, Netherlands and others,” continued Mohamed Donia.The SAMI Halal Food Index is also anticipated to be the bridge-builder for Islamic funds, exchange traded fund investing and Sukuk issues as well as for global non-Islamic investors interested in the emerging food sector markets, a non-cyclical and therefore lower risk sector.
The biggest Malaysian stocks on the SAMI index are Sime Darby Bhd, Nestle (M) Bhd and Genting Plantations Bhd. Rushdi expected more developments to the SAMI index including getting more companies as members and more institutions issuing products as a spin-off of the index.
He said the fact that so many stocks in the SAMI index were chosen from Malaysia put another feather in the country’s cap. “It would be good if Malaysia Inc would seed a fund off this index,” he said.
The next stage will see WHF and International Halal Integrity Alliance (IHI) working in tandem with companies in the SAMI Halal Food index to develop appropriate Halal compliance procedures for the next phase of development.