Monday, December 02, 2013

Syariah compliance shake-up

The securities Commission's Shariah Advisory Council (SAC) has revised its screening methodology by adopting a 2-tier quantitative approach that applies to business activity and financial ratio benchmarks. Under the financial ratio benchmarks, a company's cash in conventional account & all forms of conventional borrowings must be less than 33% of the company's financial position.

As a result of this revision, 158 stocks were removed from the Syariah-compliant list of 653 stocks. A notable names that were dropped from this exercise are Armada, SPSetia, Airasia, DLady & YTLPowr, Parkson, TChong & MRCB. New stocks added to the list are Oldtown, Brahmin's, CMSB & Suria.


Chart 1: Oldtown's daily chart as at Nov 29, 2013 (Source: Tradesignum)


Chart 2: Brahmins's daily chart as at Nov 29, 2013 (Source: Tradesignum)


Chart 3: CMSB's weekly chart as at Nov 29, 2013 (Source: Tradesignum)


Chart 4: Suria's weekly chart as at Nov 29, 2013 (Source: Tradesignum)

All these stocks had achieved bullish breakout recently. The most recent breakout was Oldtown at RM2.50 and this makes the stock very suitable for trading BUY. Brahmins is trapped within a triangle, awaiting breakout at RM1.53-1.55. Since CMSB & Suria had a good run over the past 2-3 weeks, I can only recommend a BUY on weakness.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Armada, SPSetia, Airasia, DLady & YTLPowr, Parkson, TChong, MRCB, Oldtown, Brahmin's, CMSB & Suria.

4 comments:

hs liu said...

Mr Alex,
can you do analysis Pantech and Vitrox Financial statement and technical outlook? thank you

Big Sea said...

Alex,

Where can we get the full list of 158stocks removed ?

Alex Lu said...

Hi Big Sea,

For the List of Shariah Compliance Stocks, go to the link below.

http://research.maybank-ib.com/pdf/documentrg/Shariah_compliance_021113_3278.pdf

charles leong said...

Hi Alex-I still cant comprehend what all this syariah compliant mean to the market in general.In layman term could you please elaborate what this is all about?Take for instance some of the plantation stocks that have amased huge reserve eg NSOP.Under syariah compliant do they have to distribute the reserve back to shareholders?appreciate your enlightenment please.