The Ramadan Effect: How Islam’s Holy Month Impacts Businesses

Harding Loevner’s Sergey Dubin and Babatunde Ojo discuss Ramadan’s effects on businesses and investments.






Key Takeaways

 

  • The Islamic holy month of Ramadan is observed by over one billion people worldwide who forgo food and drink from dawn until dusk each day. As the fasting period begins and ends about 11 days earlier each year, Ramadan’s effects on businesses vary in timing and impact from year to year, unlike holidays like Christmas and Chinese New Year.
  • The fasting period can be particularly disruptive to producers of seasonal products when it overlaps with their peak season, as they will not have the chance to recover lost sales.
  • Ramadan’s movement around the calendar can lead to complications for investors when it extends over two financial quarters.
  • Investor misunderstanding and temporary stock mispricings can result from Ramadan’s nuanced effects on companies’ earnings.

Disclosures

 

The “Fundamental Thinking” series presents the perspectives of Harding Loevner’s analysts on a range of investment topics, highlighting our fundamental research and providing insight into how we approach quality growth investing. For more detailed information regarding particular investment strategies, please visit our website, www.hardingloevner.com. Any statements made by employees of Harding Loevner are solely their own and do not necessarily express or relate to the views or opinions of Harding Loevner.

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