04-18-2006, 07:12 AM
Hmm....I beleive the question was on "Dividend on Shares". )
Firstly, you must understand that there is a distinction between a stock market "investor" & a stock market "day trader" or "speculator". People in Pakistan have the impression that our stock market (KSE) is 99% speculative. I do not agree. There are long-term investors who have invested in this market with a horizon ranging from 2 months to 10 years. Personally, I think these are the most succesful traders.
Now personally I beleive that buying & selling shares every 10 mins or secs @ the speed of light is "SATTA" or a crude form of gambling. Now whether that is UnIslamic or not, is for u to decide.
But, If you buy a share of a company for lets say 1 month or 2 months (at the min) then you are becoming a SHARE-HOLDER of that company. This means that for that duration you are a part-OWNER of that company. And if during that duration the company announces a dividend then you are entitled to receive it.
Now in ISLAM, it is unlawful for any muslim to engage in or become a partner or a business whose earnings come from a HARAM source. Therefore, in principle, you should NOT buy Banking, Insurance or Leasing company, beer manufacuring company stocks etc, because when u buy their stocks (even for 2 mins) u do become a partner in their business !!!
Dividends are paid from the profits of a company. THEREFORE, any dividend given by a Bank or Insurance company etc is ALSO UNLAWFUL in Islam.
Furthermore, it must be beared in mind that some companies like Pal Suzuki Motor Company or INDUS motors in Pakistan earn SUBSTANTIAL part of their income throught INTEREST earned on the HUGE CASH they have of ppl who book cars in advance. Thus, when such companies declare Dividends, a muslim should calculate the amt owing to such interest & give it AWAY as a charity.
I hope this clarifies a bit.
Firstly, you must understand that there is a distinction between a stock market "investor" & a stock market "day trader" or "speculator". People in Pakistan have the impression that our stock market (KSE) is 99% speculative. I do not agree. There are long-term investors who have invested in this market with a horizon ranging from 2 months to 10 years. Personally, I think these are the most succesful traders.
Now personally I beleive that buying & selling shares every 10 mins or secs @ the speed of light is "SATTA" or a crude form of gambling. Now whether that is UnIslamic or not, is for u to decide.
But, If you buy a share of a company for lets say 1 month or 2 months (at the min) then you are becoming a SHARE-HOLDER of that company. This means that for that duration you are a part-OWNER of that company. And if during that duration the company announces a dividend then you are entitled to receive it.
Now in ISLAM, it is unlawful for any muslim to engage in or become a partner or a business whose earnings come from a HARAM source. Therefore, in principle, you should NOT buy Banking, Insurance or Leasing company, beer manufacuring company stocks etc, because when u buy their stocks (even for 2 mins) u do become a partner in their business !!!
Dividends are paid from the profits of a company. THEREFORE, any dividend given by a Bank or Insurance company etc is ALSO UNLAWFUL in Islam.
Furthermore, it must be beared in mind that some companies like Pal Suzuki Motor Company or INDUS motors in Pakistan earn SUBSTANTIAL part of their income throught INTEREST earned on the HUGE CASH they have of ppl who book cars in advance. Thus, when such companies declare Dividends, a muslim should calculate the amt owing to such interest & give it AWAY as a charity.
I hope this clarifies a bit.
