Is That Stock Halal?


Investing wisely in the Stock Market requires adequate analyses if one does not want to come to grief. You require both fundamental analysis and (at the very least, a little) technical analysis.

Investing in halal or Shariah-Compliant stocks requires additional analysis. Two screens are recommended by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). These are the Industry Screen and the Financial screen.

Various Islamic market indexes utilise these screens. The ratios used in the Financial Screen are determined by each index's Shariah Board.

Examples of Islamic market indexes include:

To find out if the stock you want to invest in is halal or not, put it through the two screens.

Company information you require:
  1. The main industry the company operates in
  2. Statement of Financial Position (what was known as Balance Sheet)
  3. Statement of Comprehensive Income (what was known as Profit and Loss Account)
  4. Market Capitalisation (Number of shares multiplied by share price)

First, put the company through the Industry Screen.

Copyright © Lateefat B. Oba