1Yr
A question out of interest: Are capital market profits from stock trading in principle Sharia-compliant? In a way, every purchase of a stock or a share in a company is like a loan for which someone else's work is required so that the share is worth more in the end. I don't see the principle difference to interest income. But obviously I haven't understood something yet. ✌️
••
@Epi There is a clear difference: Interest rates are criticized for being "fixed". Only capital is lent and the proceeds are virtually fixed. Shares, on the other hand, are a type of partnership. The proceeds are success-dependent, one also participates in losses, at least with the invested capital. It is a standardized form of "we come together as a group and make a deal". 😁
••
1Yr
@halal_investieren Thank you for the explanation. But I have to follow up again. Find the whole thing very interesting! 😁 Let's compare a HighDiv equity ETF with a HighYield corp ETF. The former would be halal, the latter haram. Right? But what exactly is the theologically based difference now? The risks, price fluctuations and payouts are about the same for both. If the companies are unsuccessful, i.e. if the profits are lost, there is no distribution, and if they file for bankruptcy, the stake is lost in both cases. One step further: Isn't a (fair) loan also a kind of partnership? The creditor gives his capital and is compensated for the risk taken with a share in the company's success. In this way, both sides get something out of it. Why should that be haram?
••
@Epi I have not yet had anything to do with corporate bonds, but I assume that interest has to be paid regardless of success. A special situation exists in the case of insolvency, in which case you are probably stuck with it. - Interest was basically banned because it was usury and poor people were oppressed. To explain it with a simpler example: If I simply give a friend the money and say you pay me back in installments with a markup of 5%, I don't care what you do with it, that's already something different than if I say "We do a business together, I provide capital and we share the profits (On the stock market this corresponds to dividends and price gains). If we make losses, then we stand behind them together. - With shares, there is a co-ownership, a partnership. With bonds, one is simply a capital provider.
••
1Yr
@halal_investieren Again: where is the difference between a capital pool via loan vs. via share? The lender is in the same boat as the share owner because of the probability of default. Basically, interest is nothing more than the probability of default. If interest is haram, how is the lender's risk compensated? And if it can't be compensated because someone somewhere ripped someone off, how do capital-intensive companies finance themselves without destroying their ownership structure? I find the whole thing really interesting, thanks for your answers!
••