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Twitter shares found suitable for Islamic investment

Monday, 11 Nov 2013 | 12:03 PM ET
Chris Ratcliffe | Bloomberg | Getty Images

Shares in Twitter have been found eligible for investment by Islamic funds, according to IdealRatings, a company that screens stocks to determine whether they meet Muslim principles.

IdealRatings said it had vetted Twitter in response to requests from fund managers and individual investors around the world. The social media company's share price soared in last week's New York Stock Exchange debut after a $1.8 billion initial public offering.

Islamic fund managers follow guidelines such as bans on investment in firms involved with tobacco, alcohol, and gambling. Since Islam frowns on monetary speculation, they also shun some companies that use interest payments or have high debt levels.

(Read more: Twitter sizzles in debut as traders stampede to IPO)

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Twitter joins some other big U.S. technology firms, including Google and Microsoft, in being found compliant with Islamic or sharia principles by IdealRatings, a California-based firm which provides screening services to major fund managers and compilers of equity indexes.

Top stocks which have been found non-compliant include Citigroup, because of its use of interest, and luxury goods group LVMH, because it produces alcohol. IdealRatings has found about 15,000 of the 42,000 securities it has looked at globally to be sharia-compliant, it said.

There were a total of 786 Islamic mutual funds globally with $46 billion of assets under management in September, up from $41 billion at the end of 2012, according to Thomson Reuters data.

Twitter has political significance for many people in the Muslim world because it was used to coordinate mass protests against the autocratic governments toppled by the 2011 Arab Spring uprisings.

(Read more: Twitter's future—what's next?)

Mohamed Donia, chief executive of IdealRatings, said his company had examined the material on Twitter and decided most was positive for users, including tweets from Islamic scholars.

"There is a lot of content but the majority of content is useful for the community," he said by email on Monday.

—By Reuters

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  • Matt Hunter is the senior technology editor at CNBC.com.

  • Cadie Thompson is a tech reporter for the Enterprise Team for CNBC.com.

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.

  • Jon Fortt is an on-air editor. He covers the companies, start-ups, and trends that are driving innovation in the industry.

  • Lipton is CNBC's technology correspondent, working from CNBC's Silicon Valley bureau.

  • Mark is CNBC's Silicon Valley/San Francisco Bureau Chief covering technology and digital media.