How to Get Started with Shariah Compliant Stocks in Malaysia
Shariah Compliant Stocks in Malaysia
What are Shariah Compliant Stocks?
Stocks complying with Shariah standards are known as “Shariah compliant” and those not complying with the Shariah standards are known as Shariah Not Compliant.
What is the Shariah Screening Process?
Shariah Screening process is an examination conducted for companies listed on stock exchanges to know whether they are compliant with the Shariah norms or not.
The screening removes all the stocks that are not acceptable for investment, including those that deal with conventional Interest based products, liquor, gambling, and other prohibited activities as per the Shariah screening criteria set by Shariah scholars .
The screening process focuses on the business activities of the company and the financial ratios. While the former deals with knowing whether the company receives its revenue from prohibited or acceptable sources, the latter deals with investigating the financial position of the company.
Malaysia is known as a HALAL HUB for Shariah Compliant Products in the world and has been a pioneer in issuing many Shariah compliant products and frameworks.
Malaysia is largely regarded as a leader for innovation in various HALAL and Islamic finance products.
A prominent country in Southeast Asia, Malaysia has 13 states and 3 federal territories.
Let us now talk about the stock exchange of Malaysia, the Bursa Malaysia and its Shariah compliance statistics
About Bursa Malaysia
The stock exchange of Malaysia, Bursa Malaysia, is situated in the city of Kuala Lumpur. Previously it was called the Kuala Lumpur Stock Exchange.
With a total market cap of about $397.39 billion, Bursa Malaysia is the 25th largest stock exchange in the world. The shares trade in the Malaysian currency – Malaysian Ringgit that is denoted by MYR.
Bourse Malaysia mainly works through three markets
This is the main market where shares are traded in general.
ACE (Access, Certainty, Efficiency) is meant for start-ups and new companies which intend to go public.
This is an alternative market suitable for SMEs to raise funds