Stock is no longer halal - What to do?

💰 Everyday Islamic Finance Savings & Investing
#1

As salamu alaykum.

I have an important question. What do I have to do, if I own a stock and the compliance status changed from compliant to non-compliant? Do I have to sell it immediately or can I wait? What’s the ruling here?

BarakAllahu feekum

#2

Walaikum Assalaam!

Welcome to the community @Jixaz! Great to have you with us.

We received this question in a previous discussion, and here’s the answer we covered.

1 Like
#3

Hello brother, barakAllahu feek for your fast answer! It’s because of the financial screening, I forgot to mention that.

#4

Pleasure, glad I’m able to provide some light.

Yeah, so in the case of financial screening, maybe it’s worth it to hold on for a little bit and see what happens. Just please keep in mind that this isn’t financial advice.

2 Likes
#5

It’s possible the stock temporarily became non-compliant due to the fluctuations in the market. In this situation, some investors may prefer to sell immediately. However, a more common approach we’ve observed is for investors to continue to hold the stock for another quarter or two to see if it falls back into compliance. This approach is suitable for long-term investors and also one that we’ve seen endorsed by some scholars.

Alternatively, you could also just use the 12-month, 24-month, or 36-month average market cap to calculate the financial ratios instead, which is also acceptable based on several shariah boards.

2 Likes
#6

salam aleykoum I have a question, if I buy a share that is indicated as sharia compliant on your application but a month later it becomes non-compliant should I sell it? knowing that I want to keep my shares for life and only receive dividends? thank you in advance.

2 Likes
#7

Assalaamu Alykum @Django!

Moved this question to this existing topic. Let us know what you think

1 Like
#8

Unfortunately, I was little experienced when buying at the time and bought the shares with a lot of money. I didn’t know at the time that you had to sell the shares if they were no longer “halal”, otherwise I would never have invested a lot of money.

I am almost 70-80% down with some stocks and just want to wait until they are at least no longer so extreme in the downside that I can sell them. I don’t want to make a profit anyway.

As salamu alaykum