Philippine Stock Exchange reveals its list of Shariah compliant entities today - IFN

Philippine Stock Exchange reveals its list of Shariah compliant entities today

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PHILIPPINES: In a bid to diversify its investor base and boost liquidity in the country, the Philippine Stock Exchange (PSE) in collaboration with IdealRatings will release a list of Shariah compliant companies screened in accordance with AAOIFI standard. PSE will publish the list of Shariah compliant firms on its website as well as including the list in its ‘End of Day’ reports to market participants. Apart from adhering to Islamic principles on the prohibition of Riba and activities which are deemed to be Haram, the screening method incorporates an evaluation of firms' financial ratios: with limits including cash and interest-bearing investments not exceeding 30%; interest-bearing debts not exceeding 30%; and accounts receivables not exceeding 67% of market capitalization. It has been projected that approximately 50 listed companies, with a daily market capitalization exceeding US$62 billion, will meet the AAOIFI standards. Mohammad Donia, CEO of IdealRatings, is optimistic on the venture. “We are confident that global investors in Shariah compliant equities would be keen on the Shariah compliant PSE companies since several of the PSE-listed companies have outperformed their counterparts in ASEAN,” he said. It is hoped that the initiative will be the first step for the republic to venture into the Islamic capital market and participate in the US$1.5 trillion global asset class. Moving forward, Hans B Sicat, the president and CEO of PSE, said: “We shall continue our discussions with [the] National Commission on Muslim Filipinos so we can come up with an effective framework in the conduct of our market education activities.” In furtherance of its efforts, PSE has also announced that it is looking to launch an Islamic index in the near future. There is currently one Islamic financial institution operating in the republic: Al-Amanah Islamic Bank.