SCREENING OF STOCKS – THE ISLAMIC ANALYSIS

We follow the guidelines issued by Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), which is the world’s premier most body in for issuing legal opinions (fatawas) and formulating basic rules to be followed in all day to day financial matters including stock trading.

The Shariah board in AAOIFI is headed by Mufti Muhammad Taqi Usmani, (Vice-President Darul-Uloom Karachi, Permanent Member OIC Fiqh Academy), Shaikh Abdulla Bin Sulaiman Al Manea (Former Judge, Court of Cassation, Saudi Arabia) etc

Business Screening:

Shariah scholars of the Islamic financial world have termed some industries as inconsistent with Shariah percepts. Therefore investments in these stocks are not permitted. These industries are alcohol, pork-related products, conventional financial services (banking, insurance etc.), entertainment (hotels, casino/ gambling, cinema, pornography, music etc.), tobacco, and weapons and defense industries.

Financial Screening:

After removing companies with un-acceptable primary businesses, companies are further put to test on the following financial ratios.

Debt to Assets:

Exclude companies if Total Debt of the company divided by its Trailing 12-Month Average Market Capitalisation is greater or equal to 33 percent

Impure Income:

Exclude a company if cash plus interest bearing securities are equal or greater than 33 percent of Trailing 12- Month Average Market Capitalisation.

Receivables to Assets:

Exclude companies if Accounts Receivables divided by their Trailing 12-Month Average Market Capitalisation is greater than or equal to 33 percent.

Despatching the Shariah Stock List to all the Customers.

The list of Stocks which pass the screening will be regarded as Shariah compliant and thereafter dispatched to all the customers, so that they can trade in those stocks keeping in view the Islamic guidelines.

Trading occurs as usual as in any other stock brokering franchisee… (We are looking forward to doing mostly Delivery based trading )

Research

From the list of Shariah Compliant Stocks, our Research Analysts will screen out companies with are expected to give good performance various Fundamental and Technical Analysis including GARP, CANSLIM, Monte Carlo Simulations, etc. These recommendations will be dispatched to clients on a regular basis.

In PMS

List of updated stocks to be dispatched to Fund Manager, so that their research analysts can do the required fundamental and technical analysis and then invest in their choice of stocks (within in the Shariah list).

5 % INTREST BEARING PROFIT::

As per guidelines given by AAOIFI the 5 % intrest bearing profit(due to companies keeping their some cash in bank accounts) will be distributed among the poor and the needy of the community and we also will advise our clients to do so in this regard., InshaAllah.