IslamQA

Speculation and Gambling in Stock Market

Answered according to Hanafi Fiqh by ShariahBoard.org

Assalaamualaikum,

I have two questions, related to investment in stocks and certain types of funds:

Question 1.

My first question is about investment in “Equity” stock, and certain practices in it, that could be termed gambling.

So, this is my understanding that, all financial derivative products (like options, futures) are not allowed, and one of the reasons is because there is an element of gambling in them.

However, trading in “Equity” is allowed, under certain conditions. And those conditions do not mention anything about the possibility of gambling in “Equity” stock trading.

But, there are certain practices in “equity” stock trading that could be regarded as gambling, like speculation, and day-trading.

So my question is what is the exact definition of “Gambling” from fiqh perspective, and how it applies to “Equity” stock trading. And is there something written about “Speculation” and “Day-Traing” as well, in relation to “Equity” stock trading?

Question 2.

What is the fiqh position about investments in “Exchange Traded Funds (ETF)” and “Real estate investment trusts (REITs)”?

Thank you very much for your time, and reply.

JazakAllah

Speculation and Gambling in Stock Market

الجواب وباللہ التوفیق

The Shar’ai ruling about Equity Stock, Real Estate Investment, and Exchange Trade Funds can’t be advised until their details are in front of us. Normally these dealings are not devoid of interest, therefore, please send their procedure and their details in writing to inquire Shar’ai ruling about them.

واللہ اعلم بالصواب

This answer was collected from Shariahboard.org. It was established under the supervision of the eminent faqih of our era, Hazrat Shah Mufti Mohammed Navalur Rahman damat barakatuhum.

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