Volatility and performance of Malaysian stock market: a parallel market evidence / Hanis Suraya Ab Rashid

Financial system consists of financial institutions and also financial market. Financial market is divided into four categories which are money and foreign exchange market, capital market, derivatives market and offshore market. As in Malaysia, the operation of capital market is quite unique. This is because the conventional capital market operated parallelly with the Islamic capital market. A little of contrast from the Islamic capital market Islamic market is referring to financial market transactions, operations and services that comply with Islamic rules, principles, philosophy and code of practices. The law and rules of the religion requires certain types of activities, risks or rewards to either be prohibited or promoted. This includes the Shariah investing activities conducted by investor. Meanwhile, conventional capital market is offer investment instruments for any profitable project whether it is beneficent to the society or not, the only important factor is how profitable and how risky is it. Thus, conventional financing is not bound by any restrictions, as this is opposite from Islamic law. What are fascinating in this financial market is Islamic market are widely accepted by world-wide because the differential that exists in Islamic product compare to conventional product that presence far before. Since existence of Islamic stock market, Muslim investors tend to choose it over conventional stock market as they are obligate to invest in Shariah compliant product as requirement of religion to avoid matters that contradictory with principles of Islam such as riba, gharar, maysir and other nonpermissible activities. In addition, non-Muslim are welcome to invest in Islamic market as there is no prohibition