Shariah Screening Process in Islamic Capital Market
Shariah Screening Process in Islamic Capital Market
Shariah Screening Process in Islamic Capital Market
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<strong>Shariah</strong> guidance on <strong>in</strong>vestment <strong>in</strong> non-compliant<br />
stocks<br />
Case 1: Investment <strong>in</strong> <strong>Shariah</strong>-compliant stocks, which<br />
subsequently reclassified as <strong>Shariah</strong> non-compliant stocks<br />
Price > orig<strong>in</strong>al<br />
<strong>in</strong>vestment cost<br />
•liquidate<br />
immediately<br />
•Any capital ga<strong>in</strong><br />
from disposal<br />
can be kept by<br />
<strong>in</strong>vestors<br />
Price of <strong>Shariah</strong> Non-compliant Stocks<br />
On the announcement day<br />
Price < Orig<strong>in</strong>al<br />
Investment Cost<br />
• Hold until the<br />
price of stocks<br />
equal to<br />
orig<strong>in</strong>al<br />
<strong>in</strong>vestment cost<br />
• Dividends<br />
received can be<br />
used to<br />
expedite the<br />
disposal<br />
After the announcement day<br />
Price > Orig<strong>in</strong>al<br />
Investment Cost<br />
• Liquidate immediately<br />
• Profit (difference btw<br />
orig<strong>in</strong>al <strong>in</strong>vestment<br />
cost and clos<strong>in</strong>g price<br />
of announcement<br />
date) – can be kept<br />
• Profit (difference<br />
between disposal price<br />
and clos<strong>in</strong>g price of<br />
announcement date) –<br />
channeled to<br />
charitable bodies<br />
Price < Orig<strong>in</strong>al<br />
Investment Cost<br />
• Hold until the<br />
price of stocks<br />
equal to orig<strong>in</strong>al<br />
<strong>in</strong>vestment cost<br />
• Dividends<br />
received can be<br />
used to expedite<br />
the disposal<br />
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