Is there a diversification “cost” of Shari’ah compliance? Empirical evidence from Malaysian equities

Islamic equity portfolios work with a smaller investment universe given the filtering of non-Shari’ah compliant stocks. It has been theoretically argued that this culminates in suboptimal portfolio diversification, which in turn adversely affects risk-adjusted returns. We offer empirical evidence that such a conceived portfolio diversification “penalty” is far from a foregone conclusion, at least empirically. Our results tend to indicate that Islamic portfolios are not invariably handicapped in terms of portfolio diversification. We also explored dimensions that may account for differences in the relative investment performance between Islamic and conventional portfolios, such as portfolio constraints, short selling and market conditions. We believe this paper is among the first to apply substantial empirical analysis specifically with respect to the portfolio diversification perspective on Islamic equity investments.     

Risk–Return Profiles of Islamic Equities and Commodity Portfolios in Different Market Conditions

Motivated by the recent phenomenal growth in Islamic finance and the financialization of commodities, this study makes an initial attempt to investigate the risk–return profiles of optimized portfolios combining (a) Islamic equities with commodities and (b) conventional equities with commodities during the crises and noncrises periods. The findings tend to indicate that Islamic equity–commodity portfolios provide relatively higher diversification benefits than the conventional equity–commodity portfolios during the 1997 Asian Financial Crisis triggered by the financial sector compared to the 2008 global financial crisis triggered by the real housing sector. The findings further suggest that except for a few cases, commodities in general and gold in particular improve diversification benefits.     

Issues in Islamic Equities: A Literature Survey

This article reviews the current literature on Islamic equities. Our survey indicates that the bulk of articles is quantitative or empirical in nature, with a notable dearth of theoretical works. Among the common research themes explored by these articles are comparative performances of Islamic equities vis-à-vis their conventional counterparts, comparisons of Islamic portfolios with SRI funds, and empirically articulating portfolio diversification benefits associated with Islamic equities. In addition, numerous articles discuss idiosyncrasies of Shari’ah compliant stocks and portfolios under subthemes such as volatility, risk factors, and performance attributes. This survey also includes articles addressing efficiency perspectives, calendar anomalies, and issues in Shari’ah stock screening norms. We summarize general findings and offer suggestions for future research. Literature surveys on Islamic equities are few and far between, and this article, to date, represented the most recent and comprehensive attempt at that.     

An Analysis of Country Image of Brazil and Its Fresh Fruits: A Two Scales Comparison

The ever-increasing trade openness has raised the importance of the country image construct. Despite the number of articles published on the image of many countries worldwide, little focus has been paid to Brazil so far. The present study is aimed at measuring the country image of Brazil and its fresh fruits by comparing two different scales, one developed by Pisharodi and Parameswaran (1992) and the other by Nebenzahl, Jaffe, and Usunier (2003). The method used was a cross-sectional one, with the survey being characterized as quantitative and involving the application of questionnaires to 223 students of the Royal Agricultural College in England. The scales yielded five and three strong correlations, respectively. The image of Brazil was found to be negative in the former scale, whereas the latter one showed a positive image. The present research has contributed not only to further the discussion on the existing gap in the literature regarding “country image” but also to provide useful information for both marketing professionals and government agencies with the aim of strengthening the image of Brazil.     

The Relationship Between Transformational Leadership and Followers’ Perceptions of Fairness

Of recent time, there has been a concern about ethical leadership and ethics in business. Research on leadership did not pay a lot of attention to fairness and many authors have studied the relationship between leader fairness and factors such as outcome satisfaction and trust in leader for instance. For the moment, there is no study that focused on the direct relationship between transformational leadership and fairness. That’s why; in this paper our aim is to study the relationship between transformational leadership and the employees’ perceptions of fairness, mainly the three types of fairness which are distributive, procedural, and interactional in French firms. A questionnaire survey was sent to employees working in the industry and service sectors. A sample of 100 respondents was collected. We found a partial relationship between employees’ perceptions of fairness and transformational leadership. More specifically, we found that procedural and interactional fairness are strongly associated with transformational leadership.     

The Evolution of Reforestation in Brazil

This paper analyses the evolution of reforestation in Brazil and evaluates the federal government's previous programmes to stimulate that activity, focusing on the discontinued Programme of Fiscal Incentives for Afforestation and Reforestation (PIFFR). Despite the great increase in reforested area in Brazil since the 1970s, the country will suffer a scarcity of roundwood from reforested areas over the first decade of the 21st Century. In the 1960s, 1970s and 1980s, the Brazilian federal government supported programmes to foster reforestation; however, no stimulus programmes were implemented in the 1990s when roundwood demand increased and production stagnated. Today, the government recognizes the need to stimulate reforestation. The PIFFR, the most important of those earlier programmes, is evaluated using a traditional cost–benefit approach. The evaluation shows that a reinstatement of this programme would now be inappropriate. The conclusion suggests a direction for new federal policies that seek to foster the enlargement of reforestation in segments where the price mechanism has not worked well.     

Notes on the Brazilian experience with minidevaluations, 1968–1976

These notes discuss the Brazilian, experience with the crawling peg between1968 and 1976. Attention is placed on the effects of the ‘minidevaluations’ on the stabilization of short-run reserve movements, their impact on domestic inflation rates, and their consequences for financial capital movements. An evaluation is also attempted of Brazil's exchange rate alternatives to cope with the large balance of payments deficits resulting from the conjunction of the oil crisis with the accelerating GDP growth rates of the 1968–1976 period.     

Does a Held-to-Maturity Strategy Impede Effective Portfolio Diversification for Islamic Bond (Sukuk) Portfolios? A Multi-Scale Continuous Wavelet Correlation Analysis

There is a critical gap in the literature in studying the portfolio diversification opportunities available to sukuk investors and evaluating these in light of held-to-maturity strategies usually adopted by these investors. This article has made an initial attempt to study the portfolio diversification strategies for sukuk portfolios across heterogeneous investment horizons. Our findings critically indicate that returns between local currency sukuk in different markets generally have low levels of correlations across different investor holding periods, thus enabling both short and long-run portfolio diversification benefits. However, in contrast, international currency sukuk issued in different markets exhibits high levels of correlations in the longer-term investor holding periods. Also, in the domestic market context, returns on different classes of domestic sukuk are found to exhibit strong correlations in the longer-holding periods. Our findings critically highlight the feasibility of held-to-maturity sukuk investment strategies from a portfolio diversification perspective.     

The determinants of reforestation in Brazil

This article analyses the main determinants of reforestation in Brazil during the 1980s and 1990s. In the year 2000 Brazil had the sixth largest planted forests area in the world. The planted forests in Brazil saw a huge increase from 1960 to 1985. Since then, however, that stock has decreased, but the demand for roundwood continues to increase. That situation will result in a scarcity of roundwood from reforestation in Brazil in few years. The expected roundwood scarcity motivates an econometric study to compare market forces and economic policies in stimulating the reforestation in Brazil. Considering the main firms reforesting in Brazil, it can be pointed out that small and medium farmers have been planting forests while private or public programmes are present. Otherwise, large wood-based firms consider factors other than prices (such as their future demand for roundwood) to be more important in their planting decisions. Those results cast doubts about the efficiency of the market price system in solving the future scarcity of roundwood in Brazil.     

Foreign exchange exposure and impact of policy switch – the case of Malaysian listed firms

This article undertakes an in-depth study of the foreign exchange exposure of Malaysian listed firms. We examine several issues related to firm-specific and overall exposure, including an evaluation of the efficacy of adopting a hard-peg on such exposure. Our sample consists of 158 listed firms and spans the 16 year period, 1990–2005. A multivariate model using four bilateral exchange rates is used to determine firm level exposure while panel data analysis using a random-effects Generalized Least Squares (GLS) model is used to determine system-wide or aggregate sample exposure. We find a total 71% of our sample firms to have significant exchange rate exposure, a rate substantially higher than that reported for most countries, especially developed ones. The US$ is by far the single most important source of exposure with 63% of sample firms exposed to it. The sign of the beta coefficient for three of the four currencies are negative, implying that our sample firms are largely net importers in these currencies. We find exposure to be time variant and dependent on the sector within which a firm operates. Interestingly, the panel data analysis which measures aggregate exposure, shows the US$ to be a significant source of exposure even with the adoption of the hard peg. The change in policy regime to a fixed peg following the crisis appears to have had no impact at either firm-level exposure or overall system-wide exposure.