Shariah Compliant Stocks in Canada
Islamicly brings you yet another interesting blog on Shariah Compliant stocks in Canada that should comprehensively set you up with all the information on Halal Stocks in Canada. If you are a Shariah sensitive investor interested in trading stocks and equities listed on Canada’s stock exchange, then this blog is for you. Canada is one among those countries which are increasingly moving towards acceptance of Halal investment options.
Just a few years back, there was no market of Halal Stocks nor was there any mechanism of investing in stocks in a Shariah compliant manner in Canada. Moreover, there was real time tool or app with information on Halal stocks, even though Shariah compliant stocks were available in the capital markets of Canada. Alhamdulillah, now the situation has completely changed and you have enough information available on Halal stocks as well as a favorable environment in the country to make investments in Shariah Screened stocks.
Let us discuss some basic concepts that you must know about Shariah compliant investments in general before we deep dive
What is a Shariah Compliant investment?
Any investment that follows Shariah principles can be classified as Shariah compliant. Given the financial world we live in, structuring an investment in a Shariah compliant manner can be complex at times. Hence, Shariah scholars having expertise in finance have laid down certain rules and standards of Shariah compliant investing. The simplest way to begin your Shariah compliant investing is probably by starting with Shariah compliant equity investments.
What are Shariah Compliant Stocks / Halal Stocks?
In simple words, Investments in Shariah screened stocks are known as Shariah compliant or HALAL Stocks.
What is meant by Shariah Screened Stocks?
Shariah rules of investment in the equity of a company comes with certain exclusions. Shariah Screened stocks is the result of screening a listed company for such exclusions. Stocks of such companies that are not involved in or derive less than 5% revenue from prohibited business activities like alcohol, conventional financial services, gambling, pornography, tobacco, and conventional Media & Entertainment are considered to have passed the Shariah compliant business/sector screens.
Stocks passing sector checks need to pass the financial checks also. Those stocks passing sector checks as well as financial checks are considered to be Shariah screened Equities and investments in such shares and equities are permissible as per Shariah principles.
For detailed Shariah screening criteria please Check Here: Shariah Screening Criteria
As a small negligible part of your investment contains incomes from non-permissible business activities, the dividends you receive from such investments have to be purified in that proportion. You can read more details on How to Purify your Dividends in our previous blog.
We have also written a detailed blog on Shariah Compliant Stocks in USA, please do Check here: Shariah Compliant Stocks in USA
Shariah Compliant stocks in Canada
Some of the popular stocks in Canada are Shariah compliant as well i.e. they pass the Shariah screening criteria for halal equities in Canada. Many listed companies with mid and large caps are complying with the Shariah principles.
See below the top 5 companies in Canada and their Shariah compliance.
|Royal Bank of India||Regional Banks||Not Compliant|
|Tornto Dominion Bank||Regional Banks||Not Compliant|
|Enbridge INC||Natural Gas Utilities Banks||Not Compliant|
|Canadian National Railway Company||Railroads||Compliant|
|Suncor Energy INC.||Oil & Gas - Integrated||Compliant|
This is encouraging as 2 out of the top 5 largest stocks in Canada are Shariah compliant. And does boost the investors’ confidence looking for Shariah ways of investing.
You will be further surprised to know that 36% of total Canadian stocks are in accordance with Shariah standards.
Let us now see if the number of Shariah compliant stocks listed in Canada have increased in the past 5 years. As you can see in the below graph, there has been a marginal increase in that number. But that still leaves us with more than 300 Shariah compliant stocks in Canada, which is an encouraging number.
Shariah Compliant Stocks – Sector Wise
Let us examine the mix of Shariah compliant stocks in Canada.
Majority of companies listed on the Stock exchange in Canada are involved in Mining, Technology and Energy sectors and more or less these companies are compliant with Shariah Law.
|Sectors in Canada||% of Shariah Compliant Companies||% of Shariah Not Compliant|
|Real Estate & Construction||11.11%||88.89%|
|Food & Beverages||12.00%||88.00%|
About the Stock Exchange in Canada
The Toronto Stock Exchange - TSX is also known as Bourse de Toronto in Canada. The exchange is the world’s 9th largest stock exchange by market capitalization.
The Toronto Stock Exchange is among the oldest and one of the largest in North America. It was established in 1861 and is a full subsidiary company of TMX Group.
TSX is one of the exchanges managed by its parent company TMX Group. Those exchanges are:
1. Montreal Exchange
2. Toronto Stock Exchange.
3. TSX Venture Stock Exchange
4. TSX Alpha Exchange
As per our research, there are top 5 sectors in Canada that are performing well. Those sectors are:
3. Real Estate
4. Financial services
5. Health Care
Let us see the number of Shariah compliant stocks sector wise in Canada.
|Sectors||Total Stocks||Compliant||Not Compliant||% of Shariah Compliant||% of Shariah Not Compliant|
|Real Estate & Construction||81||9||72||11.11%||88.89%|
Halal investment options in Canada
There are certain halal investment options available in Canada such as:
1. Wealth Simple Halal Portfolio
2. Global Oman Fund
3. Halal ETF
4. SPUS ETF – S&P 500 ETF that includes only Shariah compliant stocks.
5. Zoya App for Stocks Screening. This app is trying to offer Shariah compliant screening for stocks listed in USA and Canada. The last we checked it was in beta stage.
General condition of the Halal Market in Canada
Finding Halal Food and HALAL slaughtered meat in Canada has become more accessible now that Zabiha and Halal meat is available everywhere be it on the street or super market.
Today’s Canada is changing and is home to various companies offering halal and Shariah solutions in finance (stocks and mutual funds), tourism, trade, food and lifestyle.
As the Halal Market in Canada is firming up, there has been a few of Halal initiatives emerging in Canada. One of them is a trade show with innovative ideas to attract Shariah sensitive investors to cater their Shariah compliant investment needs.
The EXPO HUT played an important role to get the HALAL market emerge in Canada.
Canada is a beautiful country surrounded by tall Mountains and sprawling sea bordering three oceans: the Pacific on the west, the Arctic to the north, and the Atlantic on the east. Canada has the 2nd largest land area, the 7th largest nominal per capital income, and is ranked 13th highest in the human development index.
The biggest beauty of Canada is it’s multicultural, multilingual and is renowned for its warm welcome to immigrants. The population of Canada is 37.68 million while the Muslim population is 1.054 million which is around 2.8% of total population. If you are someone who is looking for migration, then Canada is an option for you. The migration rate to Canada is 6.38% which is the 8th highest in the world. Canada’s capital is Ottawa. Toronto, Montreal, and Calgary are its largest cities. Canada shares its longest border with USA.
How Islamicly will help you get benefitted from Halal Stocks.
Islamicly App is a credible solution that gives you well researched Shariah compliance information on Stocks listed in Canada and gives instant results. You name the stock, put it in the search box, Islamicly App will tell you the Shariah status. What you are waiting for? Download the App and start investing Islamicly!
Here is the link to download Islamicly App
Do watch what one of the pioneering scholar of Islamic finance says about Islamicly here: