Developing a Sharia-compliant stock investment decision-making model in the telecommunications industry

Abstract

Sharia-compliant stocks have expanded beyond Muslim-majority markets and are increasingly sought by global investors who prioritize investment in ethical and faith-based financial instruments. Despite their similarity with conventional stocks, empirical and conceptual discussions on the determinants of Sharia stock performance, particularly in sector-specific contexts, remain limited. The current study proposes a conceptual framework for assessing Sharia-compliant stock investment decisions, specifically in Indonesia’s telecommunications industry. Using a literature-based approach, our framework integrates macroeconomic indicators, information and communication technologies (ICT) development, and firm-specific financial variables to identify relevant factors for Sharia stock return analysis. The targeted telecommunication sector was selected due to its close relationship with digital infrastructure and ICT development and is included in the permissible investment sector by Sharia law. Our study presents a preliminary conceptual model that can guide future empirical testing. At the same time presenting different perspective regarding Sharia-compliant stock studies such as Zuliansyah et al. (2023) and Handyansyah and Sukarno (2023). Furthermore, the proposed framework contributes to the literature by organizing potential determinants of Sharia stock performance within Indonesia’s telecommunication sector. Future studies can refer to our framework to validate it and assess its predictive capacity, model reliability, and practical applicability.