PSE issues list of Shariah-compliant firms

MANILA, Philippines - The Philippine Stock Exchange (PSE) has jumpstarted its goal of attracting a portion of the $1.5-trillion global Islamic funds to the local bourse.

The operator of the country’s stock exchange launched yesterday the list of almost 50 Shariah-compliant public firms that will open up the equities market for Muslim investors.

PSE president and CEO Hans B. Sicat said the Shariah list makes it easier for both institutional and retail investors to select and invest in companies compliant with Muslim laws.

“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,” said Mohammad Donia, CEO of IdealRatings Inc., which screens listed firms in accordance with the globally accepted Accounting and Auditing of Islamic Financial Companies (AAOIFI) standards.

“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,” Donia said.

For Mehol K. Sadain, secretary of the National Commission on Muslim Filipino (NCMF), the list is a “first step towards recognizing the halal-quality of securities or bonds that are traded in the Philippines, especially in the PSE.”

“The introduction of the Islamic capital market in the PSE would be viewed as a means by which we can truly globalize the Philippine economy,” said NCMF chief of staff Ikram Tawasil.

Shariah is the moral code and religious law of Islam covering the rules, regulations, teachings, and values that govern the lives of Muslims.

Guided by the AAOIFI standards, IdealRatings will look at the business and financial ratios of companies.

Listed firms involved in ventures like interest-based lending, pork, alcohol, gambling, casinos, pornography, arms and weapons, tobacco, and human stem cell research will be excluded from the Shariah-compliant list. On financial ratios, account receivables should not exceed 67 percent of market capitalization.

Companies included in the Shariah-compliant list, which will be reviewed by IdealRatings on a quarterly basis, include Aboitiz Equity Ventures Inc., D&L Industries Inc., DMCI Holdings Inc., Holcim Philippines Inc., Jollibee Foods Corp., Manila Electric Co., Megawide Construction Corp., Pepsi-Cola Products Philippines Inc., Philex Mining Corp., PLDT, Starmalls Inc. and Universal Robina Corp. The PSE so far has 255 listed firms and 135 active trading participants.

PSE data showed that PSE-listed companies that passed the AAOIFI rule book have a daily market capitalization of $62 billion.

“These companies provide liquidity to the market and would interest investors globally,” PSE said.

Advantages of Shariah-compliant firms include easier access to fresh capital and an ethical investment climate, the local bourse said.

“Shariah-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,” PSE said.