THE latest Shariah-compliant securities list which comes into effect today (Nov 27) saw a pick-up with 39 new inclusion by the Securities Commission’s (SC) Shariah Advisory Council (SAC) while another 16 have been excluded.
In the May review, there were 12 new inclusion with nine counters struck off the list. All-in, there are now 715 Shariah-compliant securities traded on Bursa Malaysia as compared to only 697 during the May review.
Of the 39 inclusion this time around, eight are initial public offerings with the most notable being Mr D.I.Y. Group (M) Bhd.
The LEAP market saw seven additional securities classified as Shariah-compliant, thus bringing the total to 28.
In classifying these securities, the SAC received input and support from the SC. The market regulator obtained information on the companies through, among others, annual reports and enquiries made to the companies.
The SAC, through the SC, will continue to review the Shariah status of securities listed on Bursa Malaysia on an annual basis based on the latest available annual audited financial statements of the companies.
In so doing, the SAC adopts a two-tier quantitative approach which applies the business activity benchmarks and the financial ratio benchmarks in determining the Shariah status of the listed securities.
Hence, the securities will be classified as Shariah-compliant if their business activities and financial ratios are within these benchmarks.
Of all the exclusions in this current review, only NTPM Holdings Bhd, Sentoria Group Bhd and Yi-Lai Bhd appear to have Shariah-based/Islamic institutional fund holdings in their listing of top 30 shareholders, according to PublicInvest Research.
“While there is still no compulsion for anyone to sell should investments be out-of-money, past instances have suggested compliance (ie immediate disposals) by funds regardless,” noted the research house.
While Pentamaster Corporation Bhd was a notable casualty in the November 2019 review, exclusion in the May 2020 review didn’t seem to hurt share prices, added PublicInvest Research. – Nov 27, 2020
