Shares - Is It Permissible for Muslims to Buy and Sell Shares in the Stock Market?
  • Question:

    Is it permissible for Muslims to buy and sell shares in the stock market?

    Assalamu Alaikum wa rahmatullahi wa Barakatuh

    Thank you for your question.

    Modern day shares in stock markets, are a form of a partnership based transaction.

    The Prophet Muḥammad (peace and blessings upon him) has stated regarding such transactions,

    “Allah says, ‘I am the Third [Being] with two partners as long as one does not deceive the other. For when one does deceive, I pull away [my mercy] from both of them.” (Bayhaqī)

    In principle, many contemporary scholars such as Muftī Khālid Saifullāh Al Raḥmānī, Muftī Taqī Uthmānī and others have permitted the buying and selling of shares in modern stock markets with some conditions, such as:

    The shares must be from companies that deal with islamically acceptable products or services. Thus, companies producing wine, pork or dealing with interest based bonds etc. would not be permitted.

    Profit and loss should be shared between the companies and those who own shares.

    Since there are numerous ways, services and products related to shares in the stock market, it would be advisable to sit down with some local knowledgeable Islamic scholars. You should present your specific portfolio to them. They would be in a better position to give a precise ruling for your individual case.

    And Allah knows best.

    Answered by Shaykh Yusuf Badat
    Hadith of the Day Imam
    Imam of the Islamic Foundation of Toronto and Director of Mathabah institute
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