Micro Connect’s MCEX certified to offer Shariah-compliant products

By Gloria Mathias

Micro Connect Group has deemed that Micro Connect (Macao) Financial Assets Exchange (“MCEX”) Shariah-compliant products are allowed to offer Shariah-compliant products on the platform.

These products will be Shariah-compliant products offered in East Asia, further strengthening MCEX’s appeal to Islamic investors. The certification recognises that Micro Connect’s revenue-sharing products are in line with Islamic law, including being non-interest-bearing, and approves the company’s Shariah-compliant screening methodology.

Being certified as Shariah-compliant enables MCEX to expand its membership landscape, opening the doors to Islamic investors looking to invest in the cash flows of China’s micro and small businesses.

MCEX members will be able to invest in Shariah-compliant DRPs (“Daily Revenue Portfolios”), baskets of Daily Revenue Obligations (DROs), and receive daily revenue shares of China’s Shariah-compliant small businesses. This certification also adds credibility to DRPs, particularly in Muslim-majority markets, and accelerates the exchange’s globalisation efforts.

“We are delighted to collaborate with Amanie Advisors in developing a methodology to tailor-make Shariah-compliant DRPs for Islamic investors, an important group in today’s capital markets. MCEX is committed to providing alternative investment opportunities to global investors who seek to make a breakthrough in China’s impact investing,” said Charles Li, Chairman of Micro Connect and MCEX.

Micro Connect has developed a Shariah-compliant screening methodology that filters out non-compliant businesses in the four sectors of retail, services, food & beverage, and culture & sports. The methodology adds a new layer to an already extremely distributed and diversified asset class.

The methodology will also enable issuers looking to issue Shariah-compliant DRPs on MCEX to follow a verification process with the platform and Amanie. Shariah-compliant DRPs would only consist of Shariah-compliant DRO stores screened under such methodology. Daily Revenue Portfolios are products offered on MCEX.

Founded in 2005, Amanie Advisors is a Shariah advisory firm specialising in Islamic finance solutions. It has provided Shariah advisory services for international banks, financial indexes, and investment institutions, including the Hang Seng Islamic China Index Fund and Value Partners’ Shariah China A-Shares ETF.