Sharia Stocks Fell Harder Than the IHSG in 2026. Here's Why
5 min read
Loading...
5 min read
If you screen out conventional banks, alcohol, gambling and interest-heavy debt, you might expect a sharia-compliant portfolio to hold up at least as well as the regular market, maybe better, in a rough year. In 2026, Indonesia's two sharia stock indexes did the opposite. Through the first seven months of the year, the ISSI (Indonesia Sharia Stock Index) fell 30.30% and the JII (Jakarta Islamic Index) fell 36.04%, both deeper than the IHSG's own 27.88% drop over the same window (HISSA, "ISSI & JII Terkoreksi Dalam di 2026"; Republika; CNBC Indonesia, 4 August 2026).
That is not a rounding error. It is a real, sourced gap, and it comes down to what a sharia screen includes and excludes, not to sharia-compliant companies being worse businesses.
Both indexes apply the same OJK and DSN-MUI (National Sharia Board) rules to decide which stocks qualify. A company has to clear two separate tests:
ISSI is the broad list, currently around 530 stocks that pass both tests, close to a majority of everything listed on the IDX (IDX's own ISSI constituent announcement, July 2026). JII is a narrower cut of the same list: the 30 most liquid, largest sharia-compliant names, rebalanced every semester by the exchange.
Here is the same seven-month window across every major IDX benchmark, all measured to the end of July 2026 and reported the same week in early August 2026:
| Index | YTD change (through end July 2026) |
|---|---|
| JII (Jakarta Islamic Index) | −36.04% |
| KOMPAS100 | −31.58% |
| ISSI (Indonesia Sharia Stock Index) | −30.30% |
| IDX80 | −29.62% |
| IHSG (Composite Index) | −27.88% |
| LQ45 | −26.62% |
Source: HISSA, "ISSI & JII Terkoreksi Dalam di 2026", corroborated by Republika and CNBC Indonesia, all retrieved 2026-08-13. IHSG's own 27.88% YTD decline through 31 July 2026 (close of 6,236.13) is separately confirmed by Investortrust.id.
The pattern is consistent: every sharia-flavored benchmark on this list (JII, ISSI, and even KOMPAS100, which leans large-cap but is not itself a sharia index) sits below the plain IHSG for the same window, and JII, the most sharia-concentrated of the group, fell the hardest of all six.
The IHSG has since clawed back some ground. It closed at 6,373.85 on 12 August 2026, up 1.69% that day (Kompas.com), though no equally recent ISSI or JII reading turned up in the same search, so this article compares all six indexes at the same end-of-July point rather than mixing dates.
The financial sector, mostly the big conventional banks, made up about 23.12% of the entire IHSG's market capitalisation as of the end of April 2026 (Cetro Trading Insight, reused from NetWort's own IHSG concentration analysis). Conventional banks like Bank Central Asia (BBCA) and Bank Rakyat Indonesia (BBRI) run on interest income by definition, so they fail the sharia financial-ratio test outright. Neither ISSI nor JII carries that roughly quarter-of-the-market weight at all.
Meanwhile, the three worst-performing IHSG sectors through the same stretch of 2026 were energy (down 38.68% year to date), property and real estate (down 37.46%) and infrastructure (down 36.05%), as of 11 July 2026 (SWA.co.id). Mining, industrial and infrastructure companies routinely pass the sharia business test, since their core activity is not itself prohibited, so they carry real weight inside ISSI and JII even while their share prices were falling faster than almost anything else on the exchange.
This is not evidence that sharia-compliant companies are worse investments, or that sharia investing "doesn't work." A screen built around business conduct and balance-sheet discipline was never designed to predict which sectors will have a good year. 2026's specific sector mix, a rough year for energy, property and infrastructure and a comparatively better one for banks, happened to land against the sharia universe. A different year, with banks under pressure and commodities strong, could easily flip the comparison the other way.
It is a reminder that "sharia-compliant" and "index-cap-weighted" describe two different things about a portfolio: one is a values and compliance screen, the other is which sectors you end up exposed to as a side effect of that screen. Neither one guarantees the other performs better.
If part of your portfolio tracks ISSI, JII, or any other Indonesian equity index, that index's sector mix, not its name, is what drove this year's result. Open Explore in NetWort to screen individual stocks by market, sector and risk profile, rather than assuming an index label tells you what you are exposed to. You can also see how the IHSG's own bank-heavy concentration compares in our full breakdown of index concentration risk.