ISSUES IN ISLAMIC EQUITYThere are seven issues of Islamic private equity.1. Risk Sharing and Equity MarketsIslamic finance has had its share of criticism. Many label contemporary offerings of Islamic finance as mere replications of modern day financial instruments window-dressed with clever legal stratagem. When stripped down to their economic fundamentals, devoid of differentiation on the basis of pure nomenclature, many Islamic financial products are said to be almost indistinguishable from mainstay (loan-based) financial instruments. In response to such voices of disapproval, many now champion the idea of risk-sharing in Islamic finance.However, one sector that stands as a prime candidate that is equity market. The notion that the stock market is including some element of risk sharing is reasonable. Most places in the world today, equity markets are thriving, systematic and regulated. This makes the best way to handle calls for partnership stylized significant risk in Islamic finance. The task at hand now is to deal with issues arising in the implementation and promotion of Sharia-compliant equities market.

2. Smaller investment universeIn modern portfolio management theory, diversification is said to be an important factor that affects the risk-adjusted performance of a portfolio of stocks. if stock portfolios are not sufficiently diversified, they may pay a price in the form of suboptimal risk or return performance.Islamic private equity finance only Sharia compliant projects to make a halal profit. This means that Islamic private equity funds have lower investment opportunities. Islamic stock portfolio is invested in certain sectors. Islam stock portfolio is invested in sectors such as services that violate sharia practicing usury, alcohol, gambling, tobacco, gambling and so on. In addition, the quantum of debt, interest income and receivables is limited to the set at acceptable levels. This led a group of stocks that can be invested by the Islamic investor limited and smaller. The question is, does it make Islam less diverse portfolio of stocks to the point that it culminated in the risk-adjusted return is lower? While the answer points to an affirmative theory, empirical research can only confirm whether this is in fact a reality.

3. Investment HeuristicsMany studies have compared the performance of stocks of Islam, with conventional indices and portfolio. This research received mixed results. Empirical findings are sensitive to the sample, the selected data, the period of time and methodologies. Therefore, it is difficult to claim that conventional equity is more to say or otherwise under any and all circumstances. The question that category of shares is a better investment (Islamic or conventional) is crucially dependent on the parameters of empirical studies. Therefore, the answer to such a question is often considers just as an academic. Less of a moot point is any insights on when Islamic portfolios fare better or for whom such an investment category is well suited.

4. Automated Stock ScreeningIn this issue, usually the sharia stock index providers such as Dow Jones, FTSE, MSCI and S & P work automatically for the inspection process to identify stocks that comply with Sharia. For example, they rely on established industry classification taxonomy in the implementation of the inspection While such an approach is both efficient and convenient, it still has unintended repercussions. One can illustrate how automatic inspection is mistaken usually people will associate with Louis Vuitton clothes and accessories. However, closer examination reveals that the large revenues come from the sale of wines and alcohol. However, automatic inspection has categorized it as Sharia-compliant as regards the only industry Louis Vuitton clothes and accessories. The same can be said when examining stocks using financial ratios. Financial reporting standards vary from one jurisdiction to another, and most if not all do not qualify for the specific purpose of Sharia stock screening.5. Going beyond Sector Screening and Financial RatioSharia Compliance is very important to Islamic Business to guide and make the business clear than conventional. But the issue is, its not necessity imply of good business without their contributions to the society. Islamic business should increase their contribution such as Social Responsibility Investment (SRI) and also Corporate Social Responsibility (CSR), environment protection and also in conservation. Islamic equity not only legal in term of law but need good performance and have a good perspective among society and the Sharia compliant can be extended to include all that is good and healthy. Increasing the SRI and CSR in Islamic equity are very helpful to motivate to take Islamic equity to its next phase of evaluation because, Islamic not only provide halal product but show that Islamic is very responsible and care with what going on in around of business.

6. Enhancing the Value PropositionNowadays, Islamic Finance also more rapidly expending to compete with the conventional finance sector, but the issue is, how the Islamic Finance make a strategy in their competition with conventional. So, enhancing the value proposition is one of the ways that needed in Islamic finance. One of the alternatives is by establishing a clear value, distinct value and gratifying value proposition. What is means is, Islamic financial product such as Islamic Equity should increase their human skills to help develop the operation value to more efficiency and effective. One of the problems of Islamic finance is still lack of human skill to enhancing the value proposition. So, maybe the Islamic should increase their study and research such using empirical investigation to get some finding and information from external and internal side on how to increase the value.

7. Role of Empirical Research Supplementing Sharia RulingsOne of the roles of empirical research towards Islamic equity is in aspect of purification. So, as a fund manager should study more about the elements that prohibited in Islamic Law or Sharia law, so that all the elements can remove from the Islamic product such as Islamic equity. Besides that, Islamic Financial also able to know the variations in Sharia Stock screening norms between the Sharia jurisdictions such as weapons manufacturing. In additional, there is common resolves as to the Sharia permissibility of practise such as short selling, trading of stock index fortunes and other derivative instruments. So, some suggestion from researcher is, even though Islamic Jurisprudence and law as a main resources of addressing issues, but the relevant empirical research finding as a supplementary role to providing the input when formulating Sharia pronouncements.