What Are Shariah Compliant or Halal Stocks?
Shariah-compliant (or halal) stocks are shares of companies that follow Islamic principles, avoiding activities like gambling, alcohol, and interest-based lending. Stocks not meeting these standards are considered Shariah non-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.
Top 5 Companies In Malaysia By Market Capitalization And Their Shariah Compliance Status
| Company | Market Cap (RM) | Shariah Compliance | Compliance Risk Factor |
| Malayan Banking Bhd | 128.39B | Not Compliant | Not Likely to Turn Compliant |
| CIMB Group Holdings Bhd | 87.4B | Not Compliant | Not Likely to Turn Compliant |
| Tenaga Nasional Bhd | 85.92B | Not Compliant | Not Likely to Turn Compliant |
| IHH Healthcare Bhd | 59.71B | Compliant | Not Likely to Turn Not Compliant |
| Hong Leong Bank Bhd | 43.41B | Not Compliant | Not Likely to Turn Compliant |
Shariah Compliant Stocks In Malaysia – Sector Wise
| Sector | Compliant | Non-Compliant | Total |
| Financial | 6 | 32 | 38 |
| Utilities | 8 | 10 | 18 |
| Healthcare | 25 | 10 | 35 |
| Services | 67 | 78 | 145 |
| Basic Materials | 67 | 48 | 115 |
| Energy | 12 | 18 | 30 |
| Transportation | 15 | 20 | 35 |
| Consumer/Non-Cyclical | 63 | 41 | 104 |
| Capital Goods | 122 | 134 | 256 |
| Retail (Grocery) | 0 | 1 | 1 |
| Technology | 95 | 20 | 115 |
| Consumer Cyclical | 48 | 18 | 66 |
| Conglomerates | 0 | 1 | 1 |
| Construction Services | 1 | 0 | 1 |
| Investment Services | 1 | 0 | 1 |
| Grand Total | 530 | 431 | 961 |
Number Of Stocks Listed On Bursa Malaysia
According to the latest data, a total of 961 companies were listed on the Malaysian stock exchange, the Bursa Malaysia. Out of them, 530 stocks are Shariah Compliant.
Bursa Malaysia Mainly Works Through Three Markets
| Main Market | ACE Market | LEAP Market |
|---|---|---|
| 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 |
The stock exchange houses various types of Shariah Compliant products and has a dedicated team to manage and promote Islamic capital market products and trading platforms as mentioned below:
This is a trading platform that facilitates for financing and investing in sharia compliant commodity products on BSAS, a number of commodities approved by Shariah Board of the Shariah Advisory Council of Securities Commission Malaysia are listed.
Bursa Malaysia-i offers exchange related services including listing, trading, depository, clearing and settlement to enhance existing infrastructure to incorporate shariah compliant features
Islamic Capital Market in Malaysia accommodates the below:
i -Stocks (Shariah Compliant Listed Equities )
i-ETFs (Shariah-compliant Exchange Traded Funds)
i-REITs (Shariah-compliant Real Estate Investment Trusts)
ETBS (Exchange Traded Bonds and Sukuk)
Others (Business Trusts, Stapled Securities)
Here you can access list of Shariah Compliant stocks approved by the SHARIAH ADVISORY COUNCIL
About Malaysia
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.
What Is The Shariah Screening Criteria For Bursa Malaysia?
Shariah screening criteria in Malaysia have various norms, Industry wise, to pass sector screening. It is worth to note that the accounting ratios to examine the compliance status has been recently removed from the criteria. To know more details, please read this
Bursa Malaysia Shariah Index
There are two types of Shariah indices in Malaysia. One of the FTSE Bursa Malaysia EMAS Shariah Index and the other is the FTSE Bursa Malaysia Hijrah Shariah Index. The former deals with those elements that are screened according to the SAC of the Malaysian Securities Commission.
The Hijrah Shariah Index deals with those elements that are screened by the SAC and also by a third party Shariah advisor, Yassar Ltd., as per a clear set of guiding principles.
Shariah Investing In Malaysia
For all those who are willing to invest in halal stocks in Malaysia, we are here for you! Our Islamicly app and web portal provides detailed information on stocks that comply with Shariah law
Our team thoroughly goes through the available stocks and ensures that they are Shariah compliant so that you do not have to track them individually. You can check out the entire list on our app.
More interesting information and blogs are just on the way! Keep reading this space! Do reach out to us if you need any assistance regarding the information on halal stocks.
