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.