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Trading in the stock market

Question:

What do the experts and scholars of shari’ah say in regards to trading shares on the stock market. For the last two years I have been dealing with £10,000 worth of bonds which I have purchased making a good profit. However, two years ago one of my close friends warned me that dealing in shares was not permissible in the shar’iah. Unfortunately, I did not take heed of his advice and continued in my trading. My profits increased substantially. If it is haram then how should I dispose of this wealth.

Answer:

All perfect praise is for Allah ﷻ, The Lord of the Worlds. I testify that there is none worthy of worship except Allah ﷻ, and that Prophet Muhammad ﷺ is His Messenger.

In response to your question, there are several conditions which should be met for trading in stocks to be permissible. First thing is a person’s intention. If there is an intention to defraud people, then dealing in the stock exchange is impermissible. Secondly the companies’ activities should not be anything which is haram, such as alcohol, gambling etc. Thirdly, the capital and the paperwork of the company must be all above board and transparent.

If these conditions are adhered to, then your money is halal and there is no problem. If there is no gambling involved, the stock exchange in principle is a means to increasing wealth. As long as these conditions are met trading in the stock market will be permissible.

And Allah ﷻ knows best.

This fatwa is written by Dr. Hafiz Muhammad Munir Al-Azhari