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Islamic Investing Emerges as Global Financial Sector

The Associated Press April 21 &emdash; The Prophet of Islam was no stranger to the marketplace. Mohammed's example as a successful trader has been emulated by Muslims for generations.

Since the seventh century, religious scholars have been interpreting Islamic law and establishing acceptable business practices and investment guidelines for Muslims.

Now, they are taking those tenets to the Internet.

Dow Jones University, a division of Dow Jones & Co., which publishes The Wall Street Journal, has gathered four highly regarded experts in the field of Islamic law to teach an online course titled Principles of Islamic Investing.

"While conventional thinking on Wall Street is that religion has no place in investment decisions, the Islamic faith asserts emphatically that it has everything to do with those decisions," said Yusuf Talal DeLorenzo, of Ashburn, Va., an Islamic scholar and course instructor.

Money Withheld From 'Sin' Industries Islamic investing is fast emerging as a financial sector, and not just in the United States.

Britain-based went online last month as the first Islamic Internet bank. Other big investment houses such as Citibank, Britain's HBSC, Swiss-based UBS and Barclays also have their own small funds mainly targeting customers in the Middle East.

Just last month, Germany's No. 4 lending institution, Commerzbank, launched its AlSukoor European Equity Fund targeting Muslims in the Middle East first, and later those living in Europe. AlSukoor raised more than 23 million dollars in its first three weeks alone.

There are between 4 million and 6 million Muslims living in the United States, and Muslims are the nation's fast-growing population segment, according to the Macdonald Center for the Study of Islam and Christian-Muslim Relations at Hartford Seminary in Connecticut.

Know the Source of Company Profits Muslims worldwide have $80-$150 billion to invest, a figure that is growing between 12 and 15 percent per year, said A. Rushdi Siddiqui, director of the Dow Jones Islamic Market Index.

The index, established last year, tracks about 650 companies that adhere to Islamic tenets. It has a total market capitalization of nearly $10 trillion.

"Wealth management is considered a religious responsibility," said Siddiqui, who is also a course instructor.

Most practicing Muslims know not to invest in the "sin" industries &emdash; those that produce alcohol, entertainment, pork products, conventional banking services and other vices forbidden by the Koran, the holy scripture of Islam.

So while a stock portfolio brimming with shares of Citigroup Inc., General Electric Co., America Online Inc., The Seagram Co. and Philip Morris Inc. might look solid to most investors, it would be shunned by devout Muslims, whose purse strings are governed by the tenets of their religion.

Also off-limits are companies dealing in weapons, human cloning, abusive animal testing and abortion &emdash;as well as those dealing in derivatives and futures, which are considered forms of gambling.

Reconcile Faith and Finances That leaves most Muslim investors to focus on higher-risk holdings in stocks and venture capital, which are balanced against low but reliable returns in commodities, trade finance and real estate.

The board of Islamic law scholars that approves companies to be listed on the Islamic Market Index must be able to determine the source of the company's profits. There are no Internet companies in the index because much of their income is derived from advertising, Siddiqui said.

In the case of IslamiQ, it won't offer interest-bearing bonds, certificates of deposit or money market funds.

For example, Citigroup is usually ruled out because it charges interest, which violates Islamic law.

General Electric is suspect as the parent company of NBC, the broadcaster that sometimes has racy and violent television shows. That's also a problem for America Online, whose Internet services can allow users access to pornography.

"I don't want my desire for financial success to get in the way of my religious obligations," said Youshaa Patel, a 23-year-old Muslim who works for a management and technology consulting firm and who enrolled in the Dow Jones course hoping to find a way to reconcile the two.

Copyright 2000 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Copyright ©2000 ABC News Internet Ventures.

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