MANILA—Forty-seven companies listed on the Philippine Stock Exchange have been determined to comply with the Islamic Shariah legal system under a new screening process adopted by the PSE in an effort to attract Muslim investors.
The PSE announced on Monday that is also mulling over the introduction of an Islamic sub-index by next year, aimed at helping fund managers who may want to launch mutual funds or exchange-traded funds (ETFs) based on Shariah compliance.
Among the big companies that made it to the list of Shariah-compliant stocks are the following: Aboitiz Equity Ventures, Aboitiz Power, DMCI Holdings Inc., Jollibee Foods Corp., Philex Mining Corp., Manila Electric Co., Philippine Long Distance Telephone Co., Semirara Mining Corp. and Universal Robina Corp.
The local bourse teamed up with IdealRatings Inc. to screen the companies listed on the PSE for Shariah compliance in accordance with the globally accepted Accounting and Auditing of Islamic Financial Companies (AAOIFI) standards.
Shariah compliance screening excludes companies with businesses in conventional interest-based lending, financial institutions, pork, alcohol, intoxicants, tobacco, arms and weapons, gambling, casinos, derivatives, pornography, music/entertainment and human stem-cell research. It also includes screening the company’s financial ratios of cash and interest-bearing investments not exceeding 30 percent, interest-bearing debts not exceeding 30 percent and accounts receivables not exceeding 67 percent of market capitalization.
Other companies that made it to the list were Agrinurture Inc., Alphaland Corp., Alsons Consolidated Resources Inc., APC Group Inc., Apex Mining, Araneta Properties, Asian Terminals Inc., ATN Holdings, Basic Energy Corp., Calapan Ventures, Centro Escolar University, Chemical Industries of the Philippines., Chemrez Technologies, Cirtek Holdings Philippines Corp., City & Land Developers Inc., Concrete Aggregates Corp., D&L Industrues, DFNN Inc., EEI Corp., Holcim Philippines, Ionics Inc., iPeople Inc., Keppel Philippines Properties, Lafarge Republic, Liberty Flour Mill, Mabuhay Vynil, Manila Bulletin Publishing, Marcventures Holdings, Megawide Construction Corp., Nickel Asia, Oriental Peninsula Resources Group., Pepsi Cola Products Philippines Inc., Philex Petroleum, Philippine Realty & Holdings Corp., Starmalls Inc., STI Education Systems Holdings Inc., Vivant Corp. and Vulcan Industrial & Mining Corp.
The 47 companies that passed Shariah compliance account for 18.4 percent of the PSE roster with daily market capitalization exceeding $62 billion.
Mohammad Donia, chief executive officer of IdealRatings, said his firm was keen on contributing to the Association of Southeast Nations exchanges for the cross-border trading of equities. He said the compilation of the list of Shariah-compliant equities at the PSE would increase investment opportunities in Asean and the global Islamic capital markets.
“We are confident that the 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. The solution is a first step for the Philippines to venture into the Islamic capital market and join the $1.5 trillion global asset class,” he said.
“The PSE is excited about this partnership with IdealRatings as we strive to bring more investors in our market,” said PSE president Hans Sicat, adding that the list would be updated quarterly to ensure not just appropriateness but also relevance.
“IdealRatings is a known and trusted institution in this field as shown by their presence in many markets globally. We are grateful to global Islamic-oriented institutions such as IdealRatings and AAOIFI for their generous assistance in our initiatives to introduce Islamic products to our Muslim brothers and foreign investors with interest on Islamic finance securities. We shall also continue our discussions with National Commission on Muslim Filipinos so we can come up with an effective framework in the conduct of our market education activities.”