CSE adds two new Dow Jones indexes

The Colombo Stock Exchange - CSE, now accommodates two new Dow Jones indexes, the Dow Jones Islamic Market AMANA Sri Lanka Index and the Dow Jones Sri Lanka Titans 20 Index.

The first, is the product of Dow Jones Indexes, (the basis of investment products known worldwide) and AMANA Securities Ltd, a trading member of CSE.

The other, Dow Jones Sri Lanka Titans 20 Index, a blue-chip measure of the country's 20 largest and most liquid stocks.

Both indexes are calculated in US Dollars (USD) and Sri Lanka Rupees (LKR). The Dow Jones Islamic Market AMANA Sri Lanka Index tracks the performance of Sri Lankan companies that comply with Shari'ah-based investment principles and is the latest offering in the Dow Jones Islamic Market (DJIM) index family. The index is designed to underline financial products such as mutual funds, exchange-traded funds and other investment vehicles.

There are 13 stocks in the Dow Jones Islamic Market AMANA Sri Lanka index. As of March 23, 2007, the year-to-date performance of the index was 3.07 percent.

President, the Dow Jones Indexes and Reprints, Michael A Petronella said in Colombo, when the indexes were announced, that Islamic banking and finance stands at around $300 billion and grows at 15 percent a year - faster than conventional finance in the GCC region and parts of Asia. Shari'ah-compliant investing is an area expected to grow in the years ahead.

Dow Jones global director, Rashdi Siddeque said that the Dow Jones Islamic Market AMANA Sri Lanka Index provides Shari'ah-compliant investors access to stocks suitable for Islamic investment as well as exposure to an untapped emerging market. It is the latest addition to the Dow Jones Islamic Market Index suite, which was originally created in 1999 and continues to serve as the premier benchmark family for Islamic-based equity portfolios.

Amana securities, as a pioneer and sole provider of a Shari'ah-compliant equity trading platform in Sri Lanka, hopes to provide the global investing community, especially in the burgeoning Islamic Industry a mechanism to facilitate their entry into an emerging market with strong credentials.

To be included in the Dow Jones Islamic Market Sri Lanka index, stocks must pass industry and financial ratio screens. Companies that are involved in alcohol, defence, weapons, entertainment, financial services, pork-related products and tobacco are excluded, Rauff said.

Also excluded are companies for which the following financial ratios are 33 percent or more: debt divided by training 12-month average market capitalisation; cash plus interest-bearing securities divided by training 12-month average market capitalisation; and accounts receivables divided by training 12-month average market capitalisation.

Launched in 1999, the Dow Jones Islamic Market Indexes seeks to measure the global universe of investable equities that pass screens for Shari'ah compliance. The index family includes more than 60 regional, country and industry indexes derived from the flagship Dow Jones Islamic Market World Indexes.

The DJIM Indexes combines Islamic investment principles with Dow Jones Indexes' transparent and rules-based methodology.

A six - member supervisory board of Islamic scholars as counsels Dow Jones Indexes on the Shari'ah compliance of eligible stocks for the DJIM.

The Dow Jones Islamic Market AMANA Sri Lanka Index is weighted by float-adjusted market capitalisation and component weights are capped at 15 percent. This index is reviewed on a quarterly basis. Daily history is available back to August 31 2005 with a base value of 1000.

The new Dow Jones Sri Lanka Titans 20 Index is designed to underline financial products and joins the Dow Jones Country Titans index family. To be eligible for inclusion, companies are ranked first by float-adjusted market capitalisation and then by 12-month average daily currency trading volume.

A final rank is then applied based on an equally weighted combination of companies' market capitalisation rank and currency trading-volume rank. The top 20 stocks make up the components of the Dow Jones Sri Lanka Titans 20 index. Any stock with more than 10 non-trading days in the previous quarter is excluded, chairman SEC, Nihal Fonseka said.

The index is weighted by float-adjusted market capitalisation and component weights are capped at 15 percent. The index is reviewed annually in March. Daily history is available, going back to December 31, 2004 with a base value of 100, CAO, CSE, Ms Surekha Sellahewa said.