Islamic Guidelines on Investing in the Stock Market

Investing in the stock market, regardless of whether it be a domestic company or a multinational corporation and regardless of it being the company in which one works, is only permissible given the following guidelines:

One must avoid investing in industries that are forbidden or doubtful, such as commercial banks that deal in interest, government bonds, insurance companies, pornography, companies that sell or produce tobacco or alcohol, gambling casinos, nightclubs, companies that sell forbidden food items or drugs and the like.

For those scholars who allow investing in “mixed companies” (those companies that produce a mixture of permissible and impermissible products), which is a large number of scholars, they add the additional conditions for such companies:

  • The essential business or goals of the company must be something that is permissible, such as agricultural products, trade, manufacturing, technology and so forth.
  • The proportion of forbidden dealings must be small and as minimum as possible with respect to the overall activity of the company, whether that be with respect to their expenses, loans, revenue or investments. Some of the Shareeah Advisory Boards have, via ijtihad, come up with the following recommendations: The forbidden expenses of the company cannot be more than 5% of the total expenses of the company; the total debt of the company divided by the market capitalization cannot be more than 30%; forbidden income as a percentage of total income cannot be more than 5%; and total interest-bearing securities divided by market capitalization must be less than 30%. These percentages are approximations determined through ijtihad. The goal is to minimize the forbidden aspects as much as possible.
  • One should then “purify” the profits they receive by giving away to charity the percentage that comes from forbidden sources.

Source: Assembly of Muslim Jurists of America

Some Cautious Guidelines on the ‘Scientific Miracles of the Qur’an’

As the early scholars cared for the miraculous nature of the Qur’an and its aspects, contemporary scholars have also shown great interest in this field. In fact, their concept of the miracle has expanded due to the emergence of modern discoveries and new sciences, along with the availability of modern research methods that have revealed new data and precise concepts. Thus, their methods for approaching the aspects of the miracle have diversified. One of the most prominent aspects that they have focused on, to the point of overshadowing other aspects, is what is known as the scientific (experimental) miracle. This focuses on Qur’anic verses that refer to some scientific issues related to cosmic and experimental sciences[1], especially astronomy, medicine, botany, and zoology. However, this approach has suffered from some mixing, exaggeration, and inflation, which require clarification through the following points:

  • The primary purpose of the Qur’an’s revelation is to know God and how to worship Him, and any reference to experimental sciences in the Qur’an comes subsequently and not originally.
  • Many who have delved into this approach are not specialists in Islamic sciences, let alone in exegesis, and thus they do not have the expertise to connect the meanings of Qur’anic verses to what appears in experimental research. This has resulted in attempts to interpret Qur’anic verses to fit with newly discovered theories and hypotheses without considering the terminology of the Arabic language and Islamic law, so they [forcefully] attempt to combine what has been mentioned in experimental research with the Qur’an.[2]
  • Whatever exegesis occurred after the exegesis of the pious predecessors (salaf) from the companions, the successors, and their followers are rejected except with the following guidelines:
    1. The issue being interpreted is true in itself. If it is false, then it is not valid to attribute it to the Qur’an. Its correctness can be demonstrated in three ways:
      1) Its correctness from a factual perspective.[3]
      2) The indication in the language about it.[4]
      3) It does not contradict Islamic law.[5]
    2. It should neither contradict nor invalidate the statements of the Companions, the Successors, and their followers.[6]
    3. The verse should be able to accommodate the interpreted matter.[7]
    4. The meaning of the verse should not be restricted to just this contemporary interpretation.

[1] Here is an important note that should be taken into consideration, which is attributing this aspect of the miracle to natural science alone, without considering the miracle from other types of sciences. This is due to the impact resulting from the division made by Western scholars of sciences into two categories: empirical sciences, which refer to the study of natural sciences, and humanities, which refer to the study of legal and linguistic sciences.

[2] For example, those who claim that the seven heavens mentioned in the Qur’an refer to the seven planets, and that the “Throne” refers to the universe.

[3] The one who realizes this is the specialist in experimental science, while the following two conditions mentioned after it are understood by the specialist in Qur’anic exegesis. Hence, there must be integration between both specialties in order for the interpretation based on such data to be valid.

[4] If an interpretation cannot be supported linguistically from the Arabic language, then any such interpretation will be considered invalid, such as someone interpreting the word “dharrah (ذرة)” mentioned in the Qur’an as a chemical atom, because it is a term that is not linguistically proven from Arabic.

[5] Like those who interpret the verse, “And He has created you all in stages” [Qur’an 71:14], as the stages of Darwinian theory in evolution, which contradicts Islamic law, therefore, it would be considered invalid.

[6] As for adding to it without negating it, there is no problem with that and it becomes like an additional saying to the statements of the salaf that the verse allows and is consistent with the context.

[7] An issue may be true in itself and does not contradict the statements of the salaf, but the verse and its indications do not support it, such as someone who interprets the verse, “And whoever Allah wants to misguide, He makes his breast tight and constricted as if he were ascending into the sky” [Qur’an 6:125], based on the discovery that when a person ascends to high altitudes, their breathing becomes restricted due to lack of oxygen.

Source: Al-Muyassar fee ‘Uloom al-Qur’an