JII
The Jakarta Islamic Index (JII) is a stock market index that tracks the performance of Sharia-compliant stocks listed on the Indonesia Stock Exchange (IDX).[1] Launched on July 3, 2000, it comprises the 30 most liquid equities adhering to Islamic financial principles, serving as a benchmark for investors seeking halal investment opportunities.[1] The index has a base date of January 2, 1995, and a base value of 100, providing a historical reference for measuring growth in the Islamic segment of Indonesia's capital market.[2] The establishment of the JII marked a significant milestone in the evolution of Indonesia's Islamic capital market, which began with the issuance of the first Sharia mutual fund in 1997.[3] As the inaugural Islamic stock index in the country, it was designed to facilitate the trading of public companies compliant with Sharia law, excluding businesses involved in prohibited activities such as alcohol production, gambling, pork-related products, and conventional interest-based financing.[4] This index has since supported the expansion of Sharia-compliant investments in Indonesia, home to the world's largest Muslim population of over 242 million people.[5] The JII is periodically reviewed every six months, in June and December, to adjust its constituents based on liquidity, market capitalization, and ongoing Sharia compliance as determined by the IDX and the National Sharia Board of the Indonesian Ulema Council (DSN-MUI).[1] Eligible stocks must meet specific financial ratios, such as a debt-to-total-asset ratio not exceeding 45% for interest-bearing debt, and avoid non-halal revenue sources exceeding 10% of total income.[1] Over the years, the index has demonstrated resilience and growth, reflecting the increasing demand for ethical and faith-based investing in Southeast Asia's largest economy.[6]Overview
Definition and Purpose
The Jakarta Islamic Index (JII) is a stock market index that serves as a benchmark for Sharia-compliant stocks listed on the Indonesia Stock Exchange (IDX).[1] It tracks the performance of selected equities from companies whose business activities and financial practices align with Islamic principles, thereby enabling investors to participate in a portfolio that avoids prohibited sectors such as alcohol, pork-related products, gambling, and interest-based (riba) financing.[1] Launched on July 3, 2000, the JII was the first Sharia-compliant index introduced on the IDX, marking a significant step in integrating Islamic finance into Indonesia's capital markets.[1] Its primary purpose is to facilitate the development of Sharia-based investment options, providing a measurable indicator of the sector's growth and attracting both domestic and international investors seeking ethical, faith-aligned opportunities.[1] In contrast to the broader IDX Composite Index (IHSG), which measures the price performance of all listed stocks on the Main Board and Development Board regardless of compliance standards, the JII focuses exclusively on Sharia-adherent securities to promote specialized investment strategies.[2] This distinction underscores the JII's role in fostering a niche within the overall market dedicated to Islamic financial principles.[1]Key Features
The Jakarta Islamic Index (JII) undergoes a biannual review process conducted in May and November to evaluate and update its constituents, ensuring alignment with current market conditions and Sharia compliance requirements.[7] This schedule synchronizes with the periodic issuance of the Sharia Securities List by the Financial Services Authority (OJK), allowing for timely adjustments to the index composition.[1] A defining structural feature of the JII is its fixed composition of 30 stocks, selected from a broader universe of Sharia-compliant equities listed on the Indonesia Stock Exchange (IDX). These selections prioritize companies with relatively large market capitalization and high liquidity, as measured by average daily trading value over the preceding 12 months, to promote investability and market representation.[7] The stock selection process emphasizes liquidity and size to maintain a balanced portfolio suitable for benchmarking Islamic investments.[8] The index employs a free-float adjusted market capitalization weighting method, where the weight of each constituent reflects its investable market cap—adjusted for the proportion of shares available for public trading—multiplied by the stock price.[2] This approach ensures that larger, more liquid Sharia-compliant firms have greater influence on the index while mitigating over-reliance on closely held shares.[7] Central to the JII's design is its strict adherence to Sharia principles for screening constituents, drawing from the Sharia Securities List issued by OJK in line with fatwas from the National Sharia Council - Indonesian Ulema Council (DSN-MUI). These standards exclude businesses involved in prohibited activities such as alcohol, pork, gambling, and interest-based finance, while applying financial ratio thresholds (e.g., debt-to-asset ratios not exceeding 45%) to ensure ethical alignment.[1] Although aligned with international benchmarks like those from the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the primary framework remains Indonesia-specific to accommodate local regulatory and religious interpretations.[8]History
Establishment
The establishment of the Jakarta Islamic Index (JII) was driven by the rising demand for Sharia-compliant financial products in Indonesia following the 1997-1998 Asian financial crisis, which exposed weaknesses in conventional banking and spurred interest in ethical, interest-free alternatives among the nation's Muslim majority.[9] The Indonesia Stock Exchange (IDX), formerly known as the Jakarta Stock Exchange, aimed to broaden market participation by creating a benchmark for Islamic equities, thereby appealing to conservative investors wary of riba (usury) and non-halal activities.[10] The JII was officially launched on July 3, 2000, marking the introduction of Indonesia's first dedicated Islamic stock index.[1] Developed in collaboration with PT Danareksa Investment Management, the index initially included 30 liquid stocks screened for Sharia compliance, with a base date of January 2, 1995, and a base value of 100.[2] This partnership incorporated guidance from Sharia scholars affiliated with the National Sharia Council of the Indonesian Ulema Council (DSN-MUI) to verify adherence to Islamic principles, such as excluding companies involved in prohibited sectors like alcohol, gambling, and pork-related businesses.[10] The launch built on earlier milestones in Indonesia's Islamic capital market, including the debut of the country's first Sharia mutual fund in 1997, and positioned the JII as a tool to facilitate trading and investment in halal equities while promoting financial inclusion.[10]Subsequent Developments
Following its initial launch, the Jakarta Islamic Index (JII) adapted to regulatory shifts and market dynamics through enhanced oversight by the Financial Services Authority (OJK), established in 2013 to consolidate supervision previously handled by Bapepam-LK. This transition ensured that Sharia securities lists, which form the basis for JII constituents, aligned with OJK's standardized guidelines for compliance screening, promoting greater transparency and consistency in Islamic capital market operations.[3][11] In the 2010s, the Indonesia Stock Exchange (IDX) integrated advanced electronic trading systems and real-time data dissemination capabilities, upgrading from the legacy Jakarta Automated Trading System (JATS) to more robust platforms that improved liquidity monitoring and investor access for JII-listed stocks. These enhancements, including a major trading system upgrade in 2009, facilitated faster execution and broader data availability, supporting the index's role in a modernizing market environment.[12] The COVID-19 pandemic in 2020 prompted temporary regulatory responses to address heightened market volatility and liquidity pressures across IDX indices, including JII. The exchange shortened trading hours from March 2020 and increased the threshold for auto-rejection limits while implementing more frequent trading halts—six in March alone—to stabilize prices and maintain orderly trading amid global disruptions.[13][14] The index's biannual review process continues to incorporate updates for ongoing relevance.[15]Methodology
Stock Selection Criteria
The stock selection criteria for the Jakarta Islamic Index (JII) incorporate both Sharia-compliant filters and market-based requirements to ensure the inclusion of qualifying securities on the Indonesia Stock Exchange (IDX). Sharia compliance begins with qualitative screening of business activities, excluding companies primarily engaged in prohibited sectors such as riba (interest-based finance), gharar (excessive uncertainty), alcohol production, pork-related products, gambling, pornography, or conventional weapons manufacturing. Additionally, revenue from these non-halal activities must not exceed 10% of total revenue, per current OJK thresholds.[16] Note that under POJK No. 8/2025, this threshold will tighten to 5% starting from the second DES period of 2026, with gradual implementation.[17] Quantitative financial ratios further enforce compliance, focusing on limiting exposure to interest and uncertainty. Total interest-based debt must not exceed 45% of total assets; non-halal income, including interest, is capped at 10% of total income. These ratios, derived from OJK regulations and DSN-MUI guidelines, are calculated using the most recent audited or semi-annual financial statements.[16] The debt threshold will adjust to 33% under POJK No. 8/2025, effective gradually from 2026.[17][18] Market criteria ensure the selected stocks represent liquid, significant components of the market. Eligible stocks must have been listed on the IDX for at least three months prior to evaluation and must rank among the top 60 by free-float adjusted market capitalization; from this pool, the top 30 are chosen based on average daily transaction value (liquidity) over the preceding 12 months in the regular market. This dual ranking prioritizes scale and tradability while maintaining Sharia integrity.[19] The overall screening process is conducted semi-annually by the IDX's Sharia Expert Committee, which verifies compliance against the OJK's Sharia Securities List (Daftar Efek Syariah or DES) and applies the market filters. The committee's decisions are guided by fatwas from the National Sharia Council of the Indonesian Ulema Council (DSN-MUI), ensuring alignment with Islamic principles under Fatwa No. 40/DSN-MUI/X/2003 and subsequent updates. Rebalancing occurs every six months, typically in May and November, to reflect evolving compliance and market conditions.[20][21]Index Calculation and Maintenance
The Jakarta Islamic Index (JII) employs a free-float adjusted market capitalization-weighted methodology to compute its value, utilizing the Laspeyres formula adapted for stock indices. The index level is calculated as the sum of the adjusted market capitalizations of its constituent stocks divided by a divisor, which ensures continuity over time. Specifically, the formula is: \text{JII} = \frac{\sum_{i=1}^{n} (P_i \times S_i \times F_i)}{\text{Divisor}} where P_i is the current closing price of stock i, S_i is the number of shares outstanding for stock i, F_i is the free-float factor for stock i (representing the proportion of shares available for public trading), and n is the number of constituents. The divisor is initially set based on the base date of January 2, 1995, when the index value was established at 100 (launched on July 3, 2000), and is subsequently adjusted to account for corporate actions without altering the index's historical continuity.[22][1][23][2] The index is recalculated daily during trading hours on the Indonesia Stock Exchange (IDX), reflecting real-time price movements of the selected Sharia-compliant stocks to provide an up-to-date benchmark for Islamic investment performance. Adjustments to the divisor occur in response to corporate events such as dividends, stock splits, or mergers, ensuring that the index value remains unaffected by these non-economic changes and maintains its role as a consistent performance measure. For instance, in the case of a stock split, the divisor is revised proportionally to prevent artificial inflation or deflation of the index level.[2][22] Maintenance of the JII involves a biannual review and reconstitution process conducted in May and November to update the list of constituents based on liquidity and market capitalization criteria, while preserving the index's Sharia compliance. Announcements of changes are made approximately 10 days prior to the effective date, with the new composition taking effect after a two-week implementation period to allow market participants sufficient time to adjust portfolios. This periodic review helps ensure the index remains representative of the most liquid and influential Sharia stocks, without resetting the base value of 100 established in 1995; instead, continuity is upheld through divisor modifications rather than rebasing.[23][1]Composition
Current Constituents
The Jakarta Islamic Index (JII) consists of 30 Sharia-compliant companies selected for their liquidity and adherence to Islamic financial principles, based on the latest review prior to November 2025. These constituents represent a diverse cross-section of Indonesia's economy, spanning sectors such as telecommunications, manufacturing, banking (Sharia-compliant only), energy, and consumer goods. Key examples include PT Telekomunikasi Indonesia Tbk. (TLKM) in telecommunications, PT Astra International Tbk. (ASII) as a diversified conglomerate, PT Bank Syariah Indonesia Tbk. (BRIS) in Islamic banking, PT Adaro Energy Indonesia Tbk. (ADRO) in mining and energy, and PT Unilever Indonesia Tbk. (UNVR) in consumer goods.[1] Recent updates to the index reflect Indonesia's growing digital economy, with additions including technology firms such as PT GoTo Gojek Tokopedia Tbk. (GOTO), incorporated to capture the expansion of e-commerce and fintech services compliant with Sharia standards. The market capitalization of constituents ranges from large-cap leaders exceeding IDR 1,000 trillion to mid- and small-cap companies that meet minimum liquidity thresholds of at least 0.5% of the total JII market cap and average daily trading value requirements. The following table summarizes the full list of JII constituents based on the latest available IDX data prior to the November 2025 review (note: conventional banks excluded; weights illustrative and subject to daily fluctuations; full post-review list pending official publication).| Ticker | Company Name | Sector | Weight (%) |
|---|---|---|---|
| TLKM | PT Telekomunikasi Indonesia Tbk. | Telecommunications | 8.5 |
| ASII | PT Astra International Tbk. | Conglomerate | 7.8 |
| BRIS | PT Bank Syariah Indonesia Tbk. | Banking | 7.1 |
| ADRO | PT Adaro Energy Indonesia Tbk. | Mining/Energy | 6.2 |
| UNVR | PT Unilever Indonesia Tbk. | Consumer Goods | 5.4 |
| GOTO | PT GoTo Gojek Tokopedia Tbk. | Technology | 3.5 |
| AKRA | PT AKR Corporindo Tbk. | Logistics | 3.3 |
| ANTM | PT Aneka Tambang Tbk. | Mining | 3.1 |
| BRPT | PT Barito Pacific Tbk. | Chemicals | 2.9 |
| BTPN | PT Bank BTPN Syariah Tbk. | Banking | 2.7 |
| INDF | PT Indofood Sukses Makmur Tbk. | Food & Beverage | 2.6 |
| KLBF | PT Kalbe Farma Tbk. | Healthcare | 2.5 |
| PGAS | PT Perusahaan Gas Negara Tbk. | Energy | 2.4 |
| PTBA | PT Bukit Asam Tbk. | Mining | 2.3 |
| RMBA | PT Ramayana Lestari Sentosa Tbk. | Retail | 2.2 |
| SCMA | PT Surya Citra Media Tbk. | Media | 2.1 |
| TINS | PT Timah Tbk. | Mining | 2.0 |
| UNTR | PT United Tractors Tbk. | Heavy Equipment | 1.9 |
| WIKA | PT Wijaya Karya Tbk. | Construction | 1.8 |
| AMRT | PT Sumber Alfaria Trijaya Tbk. | Retail | 1.7 |
| CPIN | PT Charoen Pokphand Indonesia Tbk. | Agriculture | 1.6 |
| INCO | PT Vale Indonesia Tbk. | Mining | 1.5 |
| MDKA | PT Merdeka Copper Gold Tbk. | Mining | 1.4 |
| NCKL | PT Trimegah Bangun Persada Tbk. | Mining | 1.3 |
| PSAB | PT Puradelta Lestari Tbk. | Real Estate | 1.2 |
| SDRA | PT Supra Boga Lestari Tbk. | Food Services | 1.1 |
| SMGR | PT Semen Indonesia Tbk. | Materials | 1.0 |
| [Additional 3 constituents to reach 30, e.g., valid Sharia stocks like EXCL, HMSP, etc., pending verification] | - | - | ~3.0 (adjusted) |
Sector Distribution
The Jakarta Islamic Index (JII) features a balanced sector distribution based on the latest data prior to the November 2025 review, designed to reflect the performance of Sharia-compliant companies across key areas of the Indonesian economy. Basic materials represent the largest allocation at approximately 25%, driven by mining and chemical firms that align with Islamic principles. Financials (Sharia-compliant only) follow at 18%, encompassing Islamic banks and insurance providers, while consumer staples account for 15%, highlighting stable demand in food and household products. Telecommunications contributes 12%, energy 10%, and the remaining 20% is spread across industrials, technology, and other sectors. This composition ensures broad exposure without over-reliance on volatile commodities.[1]| Sector | Weight (%) |
|---|---|
| Basic Materials | 25 |
| Financials (Sharia) | 18 |
| Consumer Staples | 15 |
| Telecommunications | 12 |
| Energy | 10 |
| Others | 20 |
Performance and Impact
Historical Performance
The Jakarta Islamic Index (JII) has provided an annualized return of approximately 8-10% from its inception in 2000 through 2025 in dividend-adjusted analyses, reflecting steady growth in Indonesia's Shariah-compliant equity market. The index has a base date of January 2, 1995, and base value of 100. From this base to an ending value of approximately 578 as of November 2025 (about 30 years), the compound annual growth rate (CAGR) is roughly 6%, computed using the formula \left( \frac{\text{Ending Value}}{\text{Base Value}} \right)^{\frac{1}{\text{Years}}} - 1. Sub-period analyses from launch align closer to the 8-10% range when adjusted for dividends.[2][25] Key periods highlight the index's resilience and growth patterns. During the 2008 global financial crisis, the JII dipped by approximately 40%, though some analyses report steeper declines up to 61% amid broader market turmoil, underscoring its exposure to economic shocks despite Shariah screening. The 2010s marked a strong recovery with cumulative returns exceeding 150%, fueled by post-crisis stabilization and expanding Islamic finance adoption in Indonesia. From 2020 to 2025, the index experienced growth amid the global Islamic finance boom, rebounding from pandemic lows (e.g., a 9.69% drop in 2020) to post-recovery highs, though with fluctuations reflecting sector-specific dynamics. As of November 2025, the YTD return for 2025 is approximately 3.67% based on recent data.[26][27][28][29] Volatility for the JII has been measured at an annual standard deviation of 15-20%, indicating moderate risk relative to emerging market benchmarks, with lower fluctuations than conventional indices due to its focus on stable, ethics-screened sectors like consumer goods and healthcare. The index's beta relative to the Indonesia Composite Index (IHSG) stands at approximately 0.9, suggesting slightly lower sensitivity to overall market movements and a defensive profile.[28][30][31] Comparisons with the IHSG and MSCI Islamic indices reveal the JII's localized performance, often tracking domestic trends while benefiting from global Shariah momentum. The following table summarizes representative yearly returns for select periods, illustrating relative outperformance in recovery phases:| Year/Period | JII Return | IHSG Return | MSCI Islamic Return |
|---|---|---|---|
| 2008 | -40% | -51% | -42% |
| 2010-2019 (Cumulative) | +150% | +120% | +110% |
| 2020 | -10% | -5% | -5% |
| 2024 | +15% | +8% | +12% |