by MARK RAO / pic by TMR GRAPHIC
PENTAMASTER Corp Bhd and KNM Group Bhd’s exclusion from the list of Shariah-compliant securities triggered heavy sell-offs of the companies’ respective shares last Friday.
Shares in Pentamaster — an automation manufacturing and technology solutions provider — fell 21 sen or 4.48% to close at RM4.48 last Friday, a day after the Securities Commission Malaysia (SC) classified the counter as a Shariah non-compliant security.
A total of 136.96 million shares in the tech company exchanged hands that day — more than 50 times its 20-day average.
KNM, a process equipment manufacturer and modular process systems provider for the oil and gas, and energy-related sectors, saw its share price fall 1.37% or 0.5 sen to close at 36 sen last Friday.
This is as 117.85 million shares in the company exchanged hands — more than triple its 20-day average.
Pentamaster and KNM were the top two most actively traded counters on Bursa Malaysia last Friday.
The companies were part of 29 securities that were excluded from SC’s updated list of Shariahcompliant securities approved by its Shariah Advisory Council (SAC). The changes came into effect on Friday last week.
Other newly classified Shariah non-compliant securities include AmCorp Properties Bhd, IJM Plantations Bhd, MNC Wireless Bhd, Mudajaya Group Bhd and Advance Synergy Bhd.
It is understood that institutional funds which are only mandated to invest in Shariah-compliant stocks will be forced to sell their shareholdings in such counters.
For investors abiding by Shariah-compliant principles, the SAC said investors must dispose of their shareholdings in newly classified Shariah non-compliant securities if their respective market prices exceed, or are equal to the investment cost.
It added that any dividends received and excess capital gain from the disposal of such securities after their exclusion should be channelled to Baitulmal and/or charitable bodies.
For a security to remain Shariahcompliant, activities such as conventional banking and lending; conventional insurance; gambling; liquor; tobacco and non-halal food and beverages must contribute less than 5% to group revenue or profit.
Meanwhile, share trading, the stockbroking business, rental received from Shariah non-compliant activities and other activities deemed non-compliant according to Shariah principles (as determined by SAC) must contribute less than 20% to group revenue or profit.
The updated list by the SC boasts a total of 696 Shariah-compliant securities — constituting 77% of the total 901 listed securities on Bursa Malaysia.
There were 38 newly classified Shariah-compliant securities on top of the 29 that were excluded from the previous list issued in May this year.
The newly Shariah-compliant securities include AirAsia Group Bhd, Malaysia Smelting Corp Bhd, Caring Pharmacy Group Bhd, Guan Chong Bhd, Country Heights Holdings Bhd and Hong Leong Industries Bhd.