Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh.  (May Allah's Peace, Mercy and Blessings be upon all of you)

 One of our brothers/sisters has asked this question:

Subject: Shares Market

Assalamu Alaikum Mr. Burhan and all the members

I have been thinking for a quite long time about the stock market. Actually I had invested some amount in it and got a substantial profit. I asked myself whether it is haraam or halal, and I got answers in both right & wrong.

For example say two people are gambling. Both will keep their amount, and whosoever wins will get his amount back and the amount of his opponent as well. So one person wins and the other loses!

In case of buying shares, we become partners of any XYZ company to some extent and if the company gets profit, we get profit too.

Another case is suppose we buy gold today and sell it after few days / months and if we get profit or incur a loss, it will be considered as business?

Therefore, I was just wondering how the stock market exactly works? Some people told me it's halal in some cases and haraam in the other! Could you please shed some light on this issue, because I haven't touched that profit yet!

Best Wishes & Regards,

(There may be some grammatical and spelling errors in the above statement. The forum does not change anything from questions, comments and statements received from our readers for circulation in confidentiality.)

Answer:

Stock Market Haram or Halal

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is no one (no idol, no person, no grave, no prophet, no imam, no dai, nobody!) worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

According to the view of most scholars in Islam, there is nothing wrong in the investment of shares and the stock market in its essence.

But the scholars have given a few guidelines to follow, to make sure that the earnings of the company whose stocks are bought are legal according to Shariah.

The three main factors that make a stock haraam according to the scholars is as follows:

1.      The company should not deal in a product which is declared haraam in its essence in Islam. Eg. alchohol, prostitution, usury, pork, etc.

2.      The company should not deal in a product which is used to harm a muslim country. Eg. Arms manufacturing in a pagan country, etc.

3.      Only the pure buying, holding, and selling of stocks is termed halaal by the scholars. All types of other derivative transactions like shorting the stock, buying calls, selling calls, buying puts, selling puts, straddles, or any other variations are not legal.

Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.

Your brother and sincere well wisher in Islam,

Burhan