Assalamualaikum Dato’ Seri Mufti. Can you explain how we could invest in shariah-compliant investment in Kuala Lumpur Stock Exchange (BSKL)? I’m confused, hope for an explanation. Thank you.
Alhamdulillah, praise and thanks to Allah for the countless blessings He has blessed us all with. Blessings and salutations to the Prophet Muhammad PBUH, his wives, his family, companions and all those that follow his teachings to the day of judgement.
Thank you to the person asking. Muslims are commanded to seek from which are permissible for the sustenance from Allah SWT in this world. This is in accordance with the statement of Allah SWT:
كُلُوا مِن طَيِّبَاتِ مَا رَزَقْنَاكُمْ
“…eat from the good things which We have provided for you,”
Surah al-Baqarah (172)
Shariah Advisory Council (SAC) of the Securities Commission is the body of authority regulating and deciding the status of shariah compliance for every counter listed in Kuala Lumpur Stock Exchange (KLSE). Council members appointed in the SAC is responsible for evaluating and checking every counter for companies listed as shariah-compliant or otherwise. The evaluation is made according to ‘Company’s Business Activity Evaluation’, ‘Financial Ratio Evaluation’ and ‘Qualitative Evaluation’.
According to the above question, one way to invest is by ensuring the investor is investing in shariah-compliant counters as the following:
First: Use the service of shariah-compliant brokers. Investors will need a CDS (Central Depository System) account to enable them to start the buying and selling of stocks in KLSE. This account can be opened at any investment banks certified by Bank Negara. Each of them is given a choice to open an Islamic or conventional account in the stock exchange. Thus, make sure the investor chooses to open an Islamic account (shariah compliant), for this account will then only list the counters that have been fully approved as shariah-compliant by the SC.
Second: If the investor opened a conventional CDS account, then shariah-compliant counters will be labelled with a small circle symbol (⁰) at the end of the counter’s name. This symbol differentiates between shariah-compliant counters and non-shariah compliant counters. Thus, investors can choose to buy from the stated counters.
Third: We suggest that investors learn the reality of stock investment in KLSE through people who are experts in the field. At the same time, he should also learn the issues of muamalat in Islam. This is crucial to ensure that the investment is according to shariah and not diverted or deviated from it. It is true how Saidina Umar ibn al-Khattab advises us all saying:
لاْ يَبِعْ فِيْ سُوْقِنَا إِلا مَنْ قَدْ تَفَقَّهَ فِي الدِّيْنِ
"No one should sell in our markets except one who has understanding in the religion."
Sunan al-Tirmizi (487)
To conclude the answer to this question, we would like to state knowledge and understanding of investment should be mastered by every Muslim investor. Muslim investors should ensure every stock is bought at shariah-compliant counters. With this knowledge, Muslim investor will be confident in every decision made in his stock exchange investment. The true concept of profit in the investment itself is the will to make decisions and the risks one is willing to take, at the same time the wisdom and competence in thinking and the accuracy of the decisions he made.
Hopefully, this explanation will give understanding and enlightenment in truly understanding the methodology of Islam. Amin.