An analysis of the implications of an Islamic stock exchange index based in Malta

Abstract

The aim of the research is to study the implications of the launch of the Malta Stock Exchange Sharia Equity index to identify possible effects which this might have on the Maltese economy and the relevant stakeholders. This was done by investigating the reasoning behind the launch of this index, and the logistics behind its operation. The study also looks at a previous attempt by the Malta Stock Exchange to work in collaboration with Arab countries, although this was not an Islamic finance project. Ultimately, it looks at the interest which the index has generated so far, although considering it’s still at an early stage, this was understandably limited so far. These objectives were achieved by using two methods of collecting data, face-to-face interviews with personnel from the Malta Stock Exchange, and a small survey among various companies from around the world. In essence, these methods concluded that although Islamic Finance is not the main financial system, it is already a huge market and there is a lot of untapped potential. This suggests that considering certain attributes which characterise Malta, it could develop as a hub for Islamic Finance. In conclusion, it should keep on studying Islamic Finance as a viable way forward for its economy. The next move for this to happen, is for the government to back the Stock Exchange in this regard, possibly by issuing sovereign sukuk. Needless to say, this requires further studies and some time to pass to able to look back at the actual effects of the Sharia Equity index.