Investing "the halal way" in Malaysia is more mainstream than many people assume. Because the country runs one of the world's most developed Islamic capital markets, a Malaysian investor does not have to hunt for a niche product — roughly four in five securities on Bursa Malaysia are already Shariah-compliant, and there is an official government list that tells you exactly which ones. The harder part is understanding what makes an investment compliant, and how to build a portfolio that stays that way.
This guide is the full-picture version: what Shariah-compliant investing actually screens for, who decides, where to find the official list, and the practical routes — stocks, ETFs, funds, REITs and global exposure — for a Malaysian who wants to invest without riba (interest) or haram sectors. If you are new to markets entirely, start with how to start investing in Malaysia first; this guide assumes you know the basics and want the Shariah layer on top.
What "Shariah-compliant" actually means
Shariah-compliant investing applies Islamic commercial principles to where your money goes. In practice that rules out a few clear things:
- Riba (interest) — you cannot earn returns from interest-based lending, so conventional banks, conventional insurers and money-lenders are out.
- Haram sectors — gambling, alcohol, tobacco, pork and non-halal food, adult entertainment, and conventional (interest-based) financial services.
- Excessive gharar (uncertainty) and maysir (speculation) — which is why conventional derivatives and some highly speculative instruments are avoided.
What it does not mean is avoiding profit, risk or the stock market. Owning a share of a real, productive, halal business — a plantation, a construction firm, a tech company, a utility — is encouraged. The screening simply keeps the business and its financing structure within Islamic limits.
Who decides: the SC's Shariah Advisory Council
You do not have to make these judgements yourself, and you should not. In Malaysia the authority is the Shariah Advisory Council (SAC) of the Securities Commission Malaysia (SC) — the highest body for Islamic capital-market matters in the country. The SAC screens every company listed on Bursa Malaysia and publishes the List of Shariah-Compliant Securities, a free PDF on the SC website, updated twice a year, on the last Fridays of May and November.
Where to check before you buy
Always confirm a stock's status on the latest SC list before buying. It is published under "Islamic Capital Market" on sc.com.my and is the definitive source. Trading apps like Bursa Anywhere and most Malaysian brokers also tag whether a counter is Shariah-compliant, which is convenient — but if there is ever a discrepancy, the SC list wins.
How the screening works
The SAC uses a two-tier quantitative test plus a qualitative judgement. You will not run these calculations yourself, but understanding them tells you why a stock is or isn't on the list.
1. Business-activity benchmark. The income a company earns from Shariah non-compliant activities (interest income, conventional banking or insurance, gambling, liquor, tobacco, non-halal food, and the like) is measured against the group's total income. The SAC introduced a single 5% benchmark in November 2025 — non-compliant income must stay below 5% of group income. It replaced the earlier dual benchmark of 5% and 20%, and takes effect for listed companies with financial years ending on or after 31 December 2025 (SC list booklet, May 2026).
2. Financial-ratio benchmarks. Two ratios are each capped at 33% of total assets:
| Ratio | What it measures | Limit |
|---|---|---|
| Cash over total assets | Cash and equivalents held in conventional (interest-bearing) accounts and instruments | Below 33% |
| Debt over total assets | Interest-bearing debt | Below 33% |
Note the wording carefully: only conventional cash and interest-bearing debt count. Cash in Islamic accounts and financing raised through Islamic (sukuk, murabahah) structures are not counted against these limits.
3. Qualitative assessment. Even where the numbers pass, the SAC also weighs the company's public image and the perception of its activities from an Islamic standpoint. This is the judgement layer that pure ratios cannot capture.
A company that clears all three makes the list. The result, in the list effective 29 May 2026, was 886 of 1,099 securities (81%) classified as Shariah-compliant — a very wide field to invest in. The previous lists showed 850 of 1,056 (30 May 2025) and 859 of 1,073 (28 November 2025).
The practical routes to invest
Being compliant is one thing; actually building a portfolio is another. Here are the main Shariah-compliant routes for a Malaysian, from most hands-on to least.
1. Individual Shariah-compliant stocks
Buy shares directly in companies on the SC list, through a Shariah-compliant trading account with an SC-licensed local broker. The mechanics are the same as any Bursa investing — you need a CDS account and a broker — so the practical steps are covered in how to invest in Bursa Malaysia stocks. The one extra habit: check each counter against the current SC list, and re-check at every May and November review.
2. Islamic ETFs and index funds
If you would rather own a basket than pick stocks, Bursa Malaysia and FTSE Russell maintain a family of Shariah indices — including the FTSE Bursa Malaysia EMAS Shariah Index (all Shariah-compliant constituents of the broad EMAS index) and the FTSE Bursa Malaysia Hijrah Shariah Index (the largest names meeting stricter international Shariah standards). Shariah-compliant exchange-traded funds listed on Bursa track Islamic benchmarks and can be bought like any share. Check the current line-up on Bursa Malaysia's Islamic Market pages, since fund availability changes.
3. Islamic unit trusts and ASNB funds
Malaysia has a deep menu of Islamic unit trusts run by the major fund houses, plus ASNB's Islamic funds (such as the Amanah Saham range managed on Shariah principles). These are professionally managed and suit investors who want regular, hands-off contributions. Our guide to buying unit trusts online walks through the platforms; simply filter for Islamic/Shariah funds.
4. Shariah-compliant robo-advisors
For a fully automated, low-effort route, SC-licensed robo-advisors offer Shariah portfolios. Wahed Invest is the dedicated Islamic robo in Malaysia, investing only in Shariah-screened assets with a built-in purification process; several conventional robos also offer a Shariah portfolio option. This is the lowest-friction way to start a diversified halal portfolio with small amounts.
5. Islamic REITs
If you want property income the Shariah way, Islamic REITs listed on Bursa hold and manage properties under Shariah rules (tenants and financing screened for compliance). They behave like the conventional REITs covered in our REITs beginner guide — regular distributions, exchange-traded — but stay within Islamic limits. Look for REITs explicitly designated Islamic/Shariah-compliant.
6. Global Shariah investing
Shariah investing is not limited to Malaysia. Shariah-screened global equity ETFs (tracking Islamic versions of world or US indices) let you diversify beyond Bursa. Accessing them usually means an international broker — the same route covered in funding a US brokerage from Malaysia — and the US vs Irish-domiciled ETF tax logic applies to Shariah ETFs too. Confirm any global fund is Shariah-certified before buying; screening standards differ slightly between providers.
Best for: Malaysian investors who want their portfolio to follow Islamic principles without giving up mainstream market access. Because about 81% of Bursa securities are compliant, a Shariah investor here is not making a narrow bet — the trade-off is a small ongoing discipline (checking the list, purifying when a stock is reclassified), not a shortage of options.
— Daniel Lim
Staying compliant: reviews and purification
Two ongoing habits separate Shariah investing from just buying stocks.
Re-check at each review. The SC list changes every May and November. A company that breaches a benchmark — say its interest-bearing debt creeps above 33% of assets — can be reclassified from compliant to non-compliant. If you hold it, you are then holding a non-compliant stock.
Dispose when reclassified. When a stock you own drops off the list, the SAC's guidance (SC list booklet, May 2026) sets out what to do:
- If the market price on the effective date is at or above your investment cost, you must dispose of the shares. Dividends received up to the effective date and the capital gain on disposal on that date can be kept; dividends received afterwards and any excess gain after the effective date should be channelled to baitulmal or charitable bodies.
- If the price is below your cost, you may hold, and keep dividends received, until dividends received plus the market value equal your cost; at that point you are advised to dispose.
Purification isn't a penalty — it's the mechanism
Purification (giving away incidental non-compliant income to charity) is how Shariah investing handles the small, unavoidable grey areas — a sliver of interest income inside an otherwise-compliant company, or a gain on a reclassified stock. It is not a fine for doing something wrong; it is the built-in cleaning step that keeps the rest of your returns clean. Robo-advisors like Wahed automate it; direct stock investors do it manually.
Common misconceptions
- "Shariah investing means lower returns." Not inherently. Shariah indices have periods of both out- and under-performance versus conventional ones, driven mostly by sector mix (heavier on plantation, tech and industrials; no conventional banks). It is a different exposure, not a worse one.
- "It's only for Muslims." Anyone can invest in Shariah-compliant securities. Some non-Muslim investors use the screens as a values or quality filter (lower leverage, no gambling or tobacco).
- "EPF and PRS can't be Shariah." They can. EPF offers Simpanan Shariah, and PRS providers offer Islamic PRS funds — both let you keep retirement savings Shariah-compliant.
Common questions
What makes a stock Shariah-compliant in Malaysia?
It must pass the SC Shariah Advisory Council's screening: a core business outside prohibited sectors (conventional finance, gambling, alcohol, tobacco, non-halal food, interest income), non-compliant income below 5% of group income, and both conventional cash and interest-bearing debt each below 33% of total assets — plus a qualitative image check. The SC publishes the official list, so you check rather than judge.
How many Malaysian stocks are Shariah-compliant?
About 81% — 886 of 1,099 securities in the SC's list effective 29 May 2026. The count is refreshed every May and November; the next release is due on the last Friday of November 2026.
Where do I find the official list?
On sc.com.my under Islamic Capital Market — the free "List of Shariah-Compliant Securities" PDF, updated in May and November. Broker apps also tag compliant counters, but the SC list is the authority.
Are there Shariah ETFs and index funds?
Yes — Bursa/FTSE Shariah indices (EMAS Shariah, Hijrah Shariah) and Shariah ETFs on Bursa, plus Islamic unit trusts, ASNB Islamic funds, Wahed's robo, Islamic REITs, and Shariah-screened global ETFs via international brokers.
What if a stock I own drops off the list?
Per the SAC's guidance: if the effective-date price is at or above your cost, dispose; keep dividends and gains up to that date, and give later dividends and excess gain to charity. If it is below cost, you may hold until dividends plus market value reach your cost, then dispose.
Related guides
- How to Start Investing in Malaysia — the beginner foundations before adding a Shariah filter
- How to Invest in Bursa Malaysia Stocks — CDS account and broker steps for buying compliant stocks
- Wahed Invest Malaysia Review — the dedicated Islamic robo-advisor, with automated purification
- REITs Malaysia Beginner Guide — property income, including Islamic REITs
- Unit Trusts in Malaysia: How to Buy Online — filter for Islamic funds
- US vs Irish-Domiciled ETFs for Malaysians — the tax logic that also applies to global Shariah ETFs
Data sourced from the Securities Commission Malaysia's Shariah screening methodology and List of Shariah-Compliant Securities (effective 29 May 2026), the Shariah Advisory Council's resolutions, and Bursa Malaysia's Islamic Market disclosures, as of July 2026. The Shariah-compliant list is updated every May and November and a stock's status can change — always verify the current list on sc.com.my before investing. This guide is informational only and does not constitute financial or religious advice; consult a qualified adviser for your own situation. money.com.my is not a licensed financial adviser.
This guide is AI-assisted.
Amendment, 17 October 2026 (short answer trimmed). The short answer at the top of this guide was cut from 103 to 68 words, to meet the 75-word limit for a quotable answer. Shortened; wording tightened, no figures changed. Removed or tightened: the closing sentence listing the ways to invest (Shariah-compliant stocks, Islamic ETFs and index funds, Islamic unit trusts, robo-advisors such as Wahed, Islamic REITs, via SC-licensed platforms) and a few connecting words; the guide body still covers all of them. No figure, rule, source or condition was added, every figure left in the answer was already in it and in the body, and the rest of the guide is unchanged.
Amendment, 17 October 2026. We re-read the SC's Shariah screening methodology page and its list booklets for 29 May 2026, 28 November 2025 and 30 May 2025, saved in docs/verification-log/evidence-batch-a-oct17. Updated: the compliant count is now 886 of 1,099 (81%) in the list effective 29 May 2026 (the guide used the 30 May 2025 list, 850 of 1,056). Corrected: the disposal rule. The SC says that if the market price on the effective date is at or above cost the investor must dispose, and may keep dividends and the gain up to that date, with later dividends and excess gain going to charity; if below cost, the investor may hold until dividends plus market value equal cost. The guide had said "above cost keep capital" and "at or below cost may hold to break even", which reversed the "equal" case and mis-described what is kept. Confirmed: single 5% business-activity benchmark (introduced November 2025, effective for financial years ending on or after 31 December 2025), 33% cash and 33% debt limits, the qualitative image test, and release on the last Friday of May and November. Held: FTSE Bursa Malaysia Shariah index descriptions, EPF Simpanan Shariah and Islamic PRS (not re-checked), Bursa Anywhere flagging.