Sharia Stock Screening
Filtering stocks against Islamic-law rules to identify which companies are considered permissible for Muslim investors to own.
What it is
Sharia stock screening is the process of checking whether a company complies with Islamic investment principles. It has two parts: a business-activity screen that excludes companies earning meaningful revenue from prohibited areas such as alcohol, gambling, conventional interest-based banking, and pork, and a financial screen that limits how much debt, interest income, and non-compliant assets a company can have relative to its size.
Why it matters
Screening lets faith-conscious investors align their portfolios with Islamic principles, and the financial ratio limits also screen out highly leveraged companies as a side effect. The pitfalls are that different standards bodies use different thresholds and denominators, a stock can move in and out of compliance as its finances change, and screening is not investment advice about whether a stock is a good buy.
How it's calculated
A company passes if its prohibited-activity revenue stays under a small tolerance (commonly around 5%) and its financial ratios, such as interest-bearing debt relative to market capitalization (or total assets, depending on the standard), stay under defined caps set by the chosen standard.
How Quintarthai uses it
Quintarthai offers opt-in, AAOIFI-based Sharia screening with pass and fail verdicts on the Sharia screening page.