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Is trading in shares halaal?
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TOPIC: Is trading in shares halaal?
Is trading in shares halaal? 9 Years, 10 Months ago Karma: 0
Is trading in shares halaal? In an Islamic business contract, the individual needs to know who they are dealing with personally, whereas this is impossible when you trade in shares.

Dr. Monzer Kahf, Scholar in Islamic Economics & Financial Expert, states the following: "Stocks/shares are basically of two kinds: common and preferred. If the preference in preferred shares in financial such as guaranteed minimum return, priority in payment at time of liquidation and the like, preferred stocks/shares are then prohibited because equal owners of the companies principal must be treated equally. They are forbidden to issue, buy, own and sell. If the preference is managerial they may be permissible.

Common stocks are not prohibited from this point of view. From another angle, stocks/shares may belong to companies that are fully compatible with the Shari'ah in establishment and all activities such as Islamic Banks, to companies whose main and major business is forbidden, or to companies whose main/major business is permissible but their articles of incorporation allow them to undertake activities that are prohibited in the Shari'ah and their management actually do such activities, like Riba-based borrowing and/or lending.

Obviously, the Shari'ah ruling on issuing, buying, owning and selling the first category is permissible while prohibited on the second. Based on these conditions, Dow Jones in cooperation with a group of Muslim scholars have studied the registered stocks and made a list that is issued under the name of Islamic Market Dow Jones Index."
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