The Dow Jones Islamic Market Greater China Index is designed to serve as underlying for financial products such as exchange-traded funds (ETFs) or as a benchmark for mutual funds. The index is licensed to Prudential Fund Management Berhad, the regional Islamic hub for the global Prudential network and one of the leading fund management companies in Malaysia, to be used as the benchmark for Prudential Dinasti Equity Fund.
“Expanding the Dow Jones Islamic Market index series to the Greater China region enables market participants to track the performance of leading Shari’ah compliant companies in one of the most dynamically evolving regions worldwide,” said Michael A. Petronella, president, Dow Jones Indexes. “While China, Hong Kong and Taiwan are markets in different developmental stages with different economic characteristics, they share a common, robust business culture. That along with expectations for long-term growth and market demand were important factors in our introduction of the Dow Jones Islamic Market Greater China Index.”
Mark Toh, Regional Head of Islamic Fund Management, Prudential Corporation Asia, and chairman and acting chief executive officer of Prudential Fund Management Berhad said, “When we first realised there was a gap in the current marketplace where no index could provide us with a fitting measure of Shari’ah-compliant equities in the Greater China region, we approached Dow Jones Indexes to create one because we recognise Dow Jones Indexes as one of the global leaders in indexes. We have worked with them before, and we trust their expertise.”
The Dow Jones Islamic Market Greater China Index measures the stock performance of Shari’ah-compliant companies with primary operations in mainland China, Hong Kong and Taiwan, which are traded at the Hong Kong Stock Exchange, the Taiwan Stock Exchange as well as at US exchanges. To determine their eligibility for the Dow Jones Islamic Market Indexes, stocks are screened based on their industry type and their financial ratios. Excluded are companies engaged in the following lines of business: alcohol, tobacco, pork-related products, financial services, defense/weapons and entertainment. Also excluded are companies for which the following financial ratios are 33 per cent or more: debt divided by trailing 12-month average market capitalization; cash plus interest-bearing securities divided by trailing 12-month average market capitalisation; and accounts receivables divided by trailing 12-month average market capitalisation.
The US dollar denominated Dow Jones Islamic Market Greater China Index is free-float market capitalisation weighted. The total weight of all Taiwanese companies is capped at 30 per cent of the index and each component’s weight is capped at 10 per cent of the index. The index composition is reviewed quarterly in March, June, September and December. The index is also reviewed on an ongoing basis to account for corporate actions such as mergers, de-listings or bankruptcies.
Year-to-date, the Dow Jones Islamic Market Greater China Index is up 59.49 per cent through October 22, 2009.
The Dow Jones Islamic Market Greater China Index comprises 290 components as of October 22, 2009. The top five components of the index are China Mobile Ltd. (Telecommunications, China), China Unicom (Hong Kong) Ltd. (Telecommunications, China), CNOOC Ltd. (Oil & Gas, China), Hon Hai Precision Industry Co. Ltd. (Industrial Goods & Services, Taiwan), and Taiwan Semiconductor Manufacturing Co. Ltd. (Technology, Taiwan) as of October 22, 2009.