THE Philippine Stock Exchange (PSE) announced on Monday that 53 companies are Shari’ah-compliant, down from 55 previously.
Three securities were removed from the list, while one was added, the PSE said, citing its quarterly screening for the period ending March 25.
The new list does not include Greenergy Holdings, Inc., PTFC Redevelopment Corp., and Marcventures Holdings, Inc. The PSE added Victorias Milling Company, Inc.
The PSE releases the updated list of Shari’ah-compliant securities every quarter. The market operator issued the previous list on Jan. 8, covering the period ending Dec. 25, 2023.
Shari’ah refers to the moral and religious code of Islam that covers rules, regulations, teachings, and values governing the lives of Muslims.
“Shari’ah-compliant investment instruments create a mechanism for listed companies to gain access to potential funding from Islamic investors including those in countries in the Middle East and other countries with high Islam population such as Malaysia and Indonesia,” the PSE said.
The adoption of Shari’ah in the Philippine capital market allows local Islamic investors to comfortably participate in the Philippine business community as well as to create an ethical investment climate, it also said.
The PSE tapped the services of IdealRatings, Inc. to assess listed companies in accordance with Shari’ah standards under the Accounting and Auditing Organization for Islamic Financial Institutions.
IdealRatings looks at companies’ adherence to Shari’ah standards in terms of their business activities and financial ratios.
Under the business screening, the income of companies derived from activities such as adult entertainment, alcohol, cinema, defense & weapons, financial services, gambling, gold and silver hedging, interest-bearing investments, music, pork, and tobacco must be less than 5%.
In terms of financial ratio screening, a company’s cash or interest-bearing deposits or investments should not exceed 30% of its market capitalization, while its interest-bearing debt should not go beyond 30% of its market capitalization.
“Through the screening process, securities that are engaged in activities involved in Haraam (impermissible or unlawful) will be taken out from the list of Shari’ah compliant stocks,” the PSE said. — Revin Mikhael D. Ochave