Is it permissible to invest in the stock and commodities market?
Is it permissible to invest in the stock and commodities market? Please help me in this regard.
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In commodity markets most of trades are speculative. For this and other reasons that are equally important, the OIC Fiqh Academy ruled that except for limited kinds of spot trades it is not permissible to invest in the commodity market.
For shares, buying and owning a company share is governed by what the company does and what contracts it practices. Companies whose main line of business is not permissible are not permissible, these include conventional banks and insurance companies, tobacco, liquor, casinos, pork, military, etc.
Out of the remaining companies (whose main line of business is permissible), you need to select those that have least of violation of Shari`ah in terms of contracts and transactions especially in regard to interest transactions, loans, alcohol, and the like. Also, in terms of dependence on interest-based borrowing and on using assets as interest generating.
In addition to all the above, one has to apply the purification principle by estimating the percentage of non-permissible income out of profit gained and give it away to Muslim charity. Further, please make some study of this issue on the internet.
Allah Almighty knows best.