An Islamic perspective on short selling

“Sell not what you do not own.” – Prophet Muhammad (peace be upon him) We have been fielding some questions from clients regarding GameStop and other extreme market action in recent weeks. Here’s our list of frequently asked questions on the subject. It’s designed to help our clients through these strange times. Azzad’s portfolio managers do not have exposure to GameStop or other names that have been influenced by coordinated moves from retail investors. As you might expect, the small size of those stocks and their generally lower quality do not make them likely candidates for ownership. It isn’t GameStop’s meteoric rise (and subsequent decline) that we want to focus on, though. It’s the target of those retail investors who used social media to bid up prices and hammer Wall Street traders: hedge funds. Specifically, let’s address short selling, the strategy hedge funds used to make money from names like GameStop before retail investors decided to push back. At Azzad, we do not allow short selling by our portfolio managers, in keeping with the principles of Islamic finance and investing. Short selling is frowned upon by our scholars, some of whom liken the practice to gambling or speculating. Basically, short

February 12, 2021 No Comments

Halal investing 101: A refresher to remind yourself of the basics

We all need a reminder every now and then about how halal investing works. In a nutshell, halal investing touches on the following four issue areas: Refraining from the giving and taking of riba Avoiding speculation (gharar) and uncertainty (maysir) Not transacting in the buying and selling of debt Abstaining from investing in companies with unethical lines of business Together, those four areas, derived from the Qur’an and Sunnah, are the primary rules of halal investing. Remember and use them to judge the soundness of your financial transactions. Often, that means referring your situation to a scholar with the appropriate training to determine the Islamic validity of contracts. The DIY (do it yourself) approaching to investing is full of problems, most of which I have seen firsthand. This brings us to the “who” of halal investing. Just as you would go to a lawyer to get an important contract review, so too should you go to a specialist when it comes to your financial affairs. Even if you don’t have a personal scholar you lean on for such things, there are individuals out there who are accredited and able to share the fruits of their jurisprudence. For many, that means

February 7, 2019 No Comments

Fighting global inequality with Islamic finance

A January 2017 report issued by Oxfam found that the eight richest individuals in the world have a net wealth of $426 billion–equivalent to the total amount of wealth held by the poorest 50% of the global population (some 3.7 billion people). That same report found that the world’s 10 largest corporations together have revenue greater than that of the 180 poorest countries combined. Not included in the report is the similarly deplorable statistic that nearly 25% of the 1.6 billion Muslims globally live in extreme poverty. While tools like zakat — which requires Muslims to give 2.5% of their wealth each year to help those in need — are vital in the struggle to mitigate the effects of inequality, we can sometimes overlook the potential of faith-based solutions to address the root causes of inequality as well. One of the most significant of these causes — the lack of financial inclusion — can be effectively addressed through access to Islamic banking. Only 10-15% of adults in Muslim-majority countries in Sub-Saharan Africa and Central, South, and Southeast Asia have bank accounts. Greater access to formal financial services like Islamic banking could help alleviate the structural poverty in these regions and

February 16, 2017 No Comments

Azzad participates in AAOIFI-World Bank conference on Islamic banking

MANAMA, Bahrain, Dec. 8, 2015 — A representative of Azzad Asset Management joined senior representatives from central banks, financial institutions, and regulators in the Kingdom of Bahrain for the annual Islamic banking and finance conference organized by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Held in conjunction with the World Bank and under the auspices of the Central Bank of Bahrain, the Dec. 6-7 event included talks on strategies to increase access to Islamic finance as well as the application of global standards in the sukuk (Islamic bond) industry. “With its focus on economic justice and inclusion, Islamic finance is a powerful force for good in the world,” said AAOIFI member and Azzad CEO Bashar Qasem, CSAA, who attended the conference. “And through its collaboration with multilateral institutions like the Washington, D.C.-based World Bank, AAOIFI continues to make strides toward the global application of its ethical guidelines and standards.” Mr. Qasem is one of the few Islamic finance professionals in the United States to have earned the Certified Shariah Adviser and Auditor (CSAA) accreditation from AAOIFI. Azzad is an outspoken advocate of the Seven Tenets of Halal Investing, which follow AAOIFI guidelines in screening out stocks of companies in unethical lines of business. In

December 8, 2015 No Comments

A slice of sukuk from the Big Apple?

On the heels of Prime Minister David Cameron’s announcement that the UK will issue a sovereign sukuk, a New York state senator is passionately making the case that New York needs to be in the sukuk business. “New York is open for business,” said state Senator Kevin Parker, a Democrat from Brooklyn. “I want to see New York, not London, as the next capital of Islamic finance.” Parker was speaking in his capacity as state senator from New York’s 21st Senate District at the 2013 Islamic Finance Conference in Washington, DC. The conference, whose agenda included sessions exploring everything from how to source Islamic capital in the United States to the relationship between socially responsible investing and Islam, was organized by the Malaysia-US Chamber of Commerce. It was intended to serve as a meeting place for interested parties to come together and advance the cause of Islamic finance in the U.S. “My understanding of Islamic finance and the role it can play in our economy came from my Muslim constituents in Brooklyn,” Parker said during his prepared remarks. “Other countries, including England, are already in the process of structuring sukuk vehicles to encourage prospective investors and attract capital from overseas.

November 7, 2013 No Comments