Sharia Compliant (Halal) stocks and investments in UAE

halal investment
halal investment
You want to trade and invest locally and around the world, but you are a Muslim. We’ve got your back because this article will show you how to invest in the UAE in a way that is in line with Sharia law.

The business world has changed because of innovation. Now, you can run different businesses online.

The number of Muslims grows daily, so they invest in different businesses. Like other traders in the region, Muslims who want to invest must follow strict rules and guidelines.

Muslim investors in the UAE must do business in a way that is in line with Sharia law. If not, the business will go against their religion. Halal investing requires the investor to know a lot about investment products and how they work to determine if an investment is allowed by Islamic finance principles. One of the most important parts of Sharia for Muslims is ensuring that all income sources are halal. Also, Islamic banking puts a lot of emphasis on ensuring that income is halal and following the Quran.

So, this article will talk about halal investing in UAE. It will tell you what it means, the Islamic investing rules, and where you can invest in Sharia-compliant investments. Read on to find out more.

What Is Sharia-compliant Or Halal Investing?:

Those of you who have been reading our blogs for a while know what Sharia-compliant stocks are. For people who are just starting to read our blog, we’d like to explain what it means for a stock to be Sharia-compliant.

Halal investments are business stakes that follow the rules of Islamic finance. Sharia economic rules are based on the ideas of community development, social fairness, and morality. Also, any Muslim thinking about halal ways to invest should put most of their attention on partnerships that make money for both sides.

Sharia gives Muslims the rules and requirements they need to follow if they want to trade in financial assets. As per Sharia compliance, Islamic economic principles promote a more moral and equitable society. Contrary to what most people in the West think, investors’ main goal is not to make money. But Islamic trade doesn’t stop people from making money. Instead, it focuses on social values to find a balance between things like family and faith.

You might think that Islamic investment is strict and unfair, but that’s not true because it only focuses on social cohesion, moral values, and a win-win result. It also says that Muslims should trade carefully and morally, which is why they need to follow the halal investing rules.

Investment and Islamic Finance Principles:

Muslim investors can use Islamic finance rules to ensure that the trade is in line with Sharia law. Even though the basic ideas of Islamic money have been around for a long time, Muslim businesses didn’t start up until the last century. Also, as the number of Muslims in the world grows, so does the interest in Islamic trading services and banking, which is around $2 trillion.

In contrast to the first investment, Islamic trade principles decide which assets are allowed and which are not. Islamic trade has to follow Sharia. Here are some bad things that happen in Islamic investment.

Paying And Charging Interest (RIBA)

Investments and payments that need interest are against the rules of Islam. If you charge interest in an Islamic trade, you won’t be following Sharia and will take advantage of people.

Risk And Uncertainty (GHARAR)

No one wants to make investments that come with a lot of risks. Also, the Sharia does not allow people to take part in trading activities that are uncertain or risky. For example, short-selling and contracts with no end date are not allowed.

Investing In Prohibited Activities

The culture and religion of Islam forbid things like going to casinos and trading breweries. So, when you take part in or invest in such activities, it goes against the rules of investing.

Speculation (MAISIR)

You can’t “theorize” about how you might invest in Islamic financial assets in the future. Participating in things like gambling is also against Sharia.

If you want to trade and invest in the UAE, you shouldn’t do any of the above things, or you might get in trouble with Sharia. So, can you make money if you put your money in Islamic countries?

According to Islamic financial principles, making money off of investments is greed. It is forbidden in the Quran and is thought to distort wealth by encouraging taking advantage of other people to get rich and not adding much to society. Because of this rule, most Muslim investors prefer to build up their wealth through the stock market over other investments.

So, keeping this in mind, what are the pros and cons of halal Islamic investment?

Advantages Of Halal Investment:

  • Lessen the risks of investing. With the strict rules of Islamic financial principles, it is less likely that a Muslim investor will get involved in a risky deal. Investors are rarely affected by changes in the trade market.
  • The halal investment encourages social responsibility by making sure that resources, fairness, and equality are balanced among community members. It also supports human rights. Also, the halal investment makes sure that Islamic trade is in line with sharia law.
  • The halal investment scheme makes sure that Muslims trade and invest in a disciplined way. To put it another way, you eat what you really earn. So, halal investment cuts down on corruption and criminal activity in trade.

The Challenges of Halal Investment:

  • There are limited opportunities since halal trading assets are relatively new in the market; hence, finding an option can be difficult.
  • The research done on halal investment is higher compared to traditional investment. The assessment requires more focus and effort, which most investors don’t meet.
  • The trading portfolios of halal business investors take more time to develop.

How To Invest In Sharia Compliant (Halal) In UAE:

The Islamic nation has embraced the standards required to participate in trade and investment. Therefore, Muslims have joined the rest of the world in participating in business while ensuring they meet the halal expectation. How, then, do Muslims invest?

Investing in Stocks and ETFs Through Brokers

Few brokers allow investors to invest in halal and sharia-compliant investments. Investors can get access to multiple investment options such as stocks, ETFs, and Sukuk.

Here are some examples of these online platforms that people in the UAE can invest through:

Sharia-compliant investments through UAE banks

The majority of local banks in the UAE offer their clients the opportunity to invest their money in Sharia-compliant investments. They have various options such as funds, Sukuk, trading securities, mutual funds, and structured products.

However, as it may sound like a sweet deal, banks might offer a lower percentage of returns than other means of investing. Some examples of banks that are sharia compliant in the UAE include;

National Bonds of UAE

This government-backed group is in charge of selling bonds to the general public. The facility’s primary goal is to offer low-risk and low-ret investments.

Eligibility: Anyone can buy national bonds, even people who live abroad. You must be at least 21 years old to buy a national bond. Parents can buy savings bonds for children younger than 21. Also, anyone who makes money is eligible.

The National Bond of the UAE has a wide range of financial products for you. Also, the products are meant to keep your money safe and give you a return on it. Some of the products are savings bonds, a 2-year booster, a 2-year payout, an education plan, and a 10-year payout.

You can buy national bonds, but you need at least 100 AED to do so. The National Bonds of the UAE have a reward program with two to four lucky draws per year. You can get your money back if you are an investor. What do national bonds do for you?

  • The national bonds pose a low-risk investment; payment is sure, encouraging saving and offering returns to the people.
  • It offers attractive profits for your savings.
  • The National bonds are sharia-compliant. Your investment is in safe hands for borrowing and facilitating social responsibility.

Check out our National Bonds Guide.


Gold has been used as a way to invest for a long time, so it is seen as an old way to invest that meets the requirements of sharia. This asset is easy to get and trade and also increases in value over time. In all the years it has done business, it has never gone against the rules of Islamic investment.

But if we look at Sukuk as an investment, it is an alternative to traditional bonds, which rarely make money. Sukuk are usually called asset-based bonds; since they don’t pay interest, they are considered safe investments.

Real Estate in UAE

Muslim traders often only invest in real estate, but the mortgage must be sharia-compliant, which means it can’t charge interest.

Prohibited Industries by Sharia:

As we’ve already talked about, any halal trade or investment must follow the UAE’s investment principles. Any kind of business that goes against sharia is terrible. Because of this, some industries are seen as bad for the community and don’t follow the rules for sharia investment in the area.

Here’s a list of these industries:

  • Organizations involved in producing, selling, or advertising alcohol
  • Companies that advertise for or sell cigarettes or narcotics
  • Financial transactions involving interest (riba)
  • Any casino-related sectors
  • Organizations engaged in sexual marketing
  • Pork-related industries

Sharia also says that you can’t invest in businesses that get more than 5% of their income from doing things that are bad for society and don’t follow the rules. This rule is called the 5% rule, and every trader must follow it. Muslims should also do research on the company they want to invest in. They should look at the company’s financial statements and where it stands in the business world.

What Should You Look For Before Investing?:

When you’re getting ready to invest or trade in the UAE, you should add the following to your list of things to do before choosing the company to work with.

  • Consider companies that are sharia compliant by operating under the strict guidelines of sharia practices. Such companies are known to be pure.
  • Choose companies that have haram practices. Such companies work under the prohibited boundaries of sharia.
  • Work with mixed companies that initiate both halal and haram practices.

Some of the world’s best traders and investors are Muslims. They have also grown their business outside of the UAE. Many halal finance sectors have opened up in different places around the world. Because of this, Muslims don’t have to do business only in the Middle East.

Bottom Line:

Islamic investment and trade need to be managed in a disciplined and moral way. Some things that aren’t allowed in Islamic finance are investments based on interest, tricky financing, and betting on investments.

Private equity firms are known for the fact that they need halal trading solutions more and more. In the last ten years, more and more financial organizations and foreign currency markets have taken steps to get a foothold in the Islamic finance and private equity markets.

Sharia-compliant investment options are more expensive on the market because more people from places like Africa and the United Arab Emirates are getting into personalized equity trading. Islamic trading finance is no longer a niche area of banking that only a few people know about.

Muslims make up a quarter of the world’s population, which is great for their financial growth. Muslims make up a big and growing share of investors. Rich people and financial institutions can make a lot of money from wealthy Muslims’ assets and investment money.

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