Islamic Economics Literature: IDX Sharia Growth

Islamic Capital Market is a financial system that operates on the principles of Islamic Sharia in various financial activities, including trading stocks, bonds, and other financial instruments. The underlying principles of Islamic capital market include prohibition of riba (interest), gambling, speculative transactions, and business activities considered unethical according to Islamic teachings.

Sharia Compliant Stocks are shares of companies that operate in accordance with the principles of Islamic Sharia. In the context of the Sharia capital market, Sharia-compliant stocks must adhere to specific criteria set by Sharia supervisory bodies or Sharia boards. The principles upheld in Sharia-compliant stocks include prohibition of riba (interest), gambling, production or trading of alcohol, pork products, and businesses deemed unethical according to Islamic teachings.

IDX Sharia Growth is an index comprising Sharia compliant stocks that meet criteria such as having a trend of net profit growth and revenue relative to price, transaction liquidity, and good financial performance. The evaluation of the IDX Sharia Growth index consists of major evaluations, which include the selection of constituents and scheduled weight adjustments in May and November, becoming effective on the first trading day of June and December. The minor evaluation consists of scheduled weight adjustments in February and August, becoming effective on the first trading day of March and September. The calculation method uses Capped Adjusted Free Float Market Capitalization Weighted with the highest stock weight limit set at 15%, adjusted during evaluations. The IDX Sharia Growth index has been calculated since its base day with a base value of 100. As is known, IDX Sharia Growth was launched by the Indonesia Stock Exchange (IDX) on October 31, 2022.