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Wednesday, January 15, 2014

Shariah Compliant Securities: Encouraging Muslim Investors

The Philippine Stocks Exchange has recently released a guideline for its Shariah stock market program. This aims to encourage Muslim Filipinos in the country, and also an estimated 1 trillion USD of global Islamic funds to invest in Philippine stocks. Shariah is the moral code of Islam which covers the rules, teachings and values adhered to by Muslims. The release of Shariah-compliant securities make it easier for Muslim investors to invest in the country, while also adhering to the teachings from their religion.

As of the initial list issued by PSE, there are 47 publicly-listed companies were considered Shariah-compliant based on these established criteria:
-Income derived from businesses in conventional interest-based lending, financial institutions, pork, alcohol, intoxicants, tobacco, arms and weapons, gambling, casinos, derivatives, adult entertainment, music and human stem-cell research - should be less than 5%.
-The company's financial ratios adhere to Shariah standards, which include having a limit of 30% against a company's market capitalization with respect to its cash, interest bearing investments and investment bearing debts positions and a 67% on its accounts receivables.

Among the Shariah-compliant firms are Aboitiz Equity Ventures (AEV), Asian Terminals Inc.(ATI), DMCI Holdings (DMC), Jollibee Foods Corp. (JFC), Manila Electric Co.(MER), Megawide Construction (MWIDE), Pepsi-Cola Products Philippines (PIP), Philippine Long Distance telephone Co.(TEL), and Universal Robina Corp (URC).

For a full list of Shariah compliant companies, go here.

Other Stories:
The Philippine Stocks Market 2013: A Year in Review
User Guide: Stocks Profit Monitoring Worksheet
Which stocks to BUY or SELL?

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