Many Muslim investors think choosing syariah stocks is simple: open the JII or JII70 list, pick the ones that look good, and buy. Done. But is it really that straightforward?
The reality is that appearing on the JII list is only the first requirement — not a guarantee that a stock is worth buying right now, let alone that it will be profitable. Some stocks in JII70 have deteriorating fundamentals. Others score well technically but have just been removed from the syariah list the following month. And some stocks not in JII actually pass all DJIMI syariah filters.
This article covers how to choose the best syariah stocks comprehensively — from halal criteria and financial ratio filters to index comparisons and how to combine them with technical analysis for better results.
What Are Syariah Stocks and Who Determines Them?
Syariah stocks are shares in companies that meet the criteria of Islamic principles, encompassing two main aspects: halal business activities (qualitative aspect) and sound financial structure (quantitative aspect).
In Indonesia, the list of syariah stocks is determined by the Financial Services Authority (OJK) in collaboration with the National Sharia Council of the Indonesian Ulema Council (DSN-MUI). This list is updated twice a year — every May and November — through the Syariah Securities List (Daftar Efek Syariah / DES).
| Index | Contents | Revised |
|---|---|---|
| ISSI | All syariah stocks on IDX (~400–500 stocks) | 2× per year (May & November) |
| JII70 | The 70 most liquid syariah stocks from ISSI | 2× per year |
| JII (JII30) | The 30 most liquid syariah stocks from JII70 | 2× per year |
| DJIMI | Global Dow Jones Islamic Market Index standard — also applicable to US stocks | Continuous (real-time screening) |
Important: The JII and JII70 indices are not simply lists of halal stocks — they include additional filters for liquidity and market capitalization. A fully halal stock that lacks sufficient liquidity may not make it into JII70, but it will still be included in ISSI.
Two Layers of Syariah Stock Criteria You Must Understand
Layer 1 — Qualitative Criteria: Halal Business Activities
Companies must not operate in business sectors prohibited under syariah. The following sectors automatically disqualify a stock:
| Not Halal (Automatic Disqualification) | Example Companies / Sectors |
|---|---|
| Interest-based (riba) banking & finance | Conventional banks, non-syariah multifinance |
| Alcohol and tobacco | Cigarette manufacturers, alcohol distributors |
| Gambling and prohibited entertainment | Casinos, online betting platforms |
| Pork products and derivatives | Certain non-halal food manufacturers |
| Controversial weapons and defense | Weapons manufacturers for prohibited parties |
This is why conventional bank stocks are not on the syariah list: BBCA, BRI, BNI, Mandiri — all conventional banks are automatically disqualified at the first filter because their core business is based on interest (riba), not because their financial ratios are poor.
Layer 2 — Quantitative Criteria: Syariah Financial Ratios
Even if a company's business is halal, its financial structure must also meet certain thresholds:
DJIMI Filters (global standard):
- Debt Ratio = Total Debt / Market Cap < 33%
- Receivables Ratio = (Receivables + Cash) / Market Cap < 45%
- Non-Halal Revenue = Non-Halal Revenue / Total Revenue < 5%
The OJK/DSN-MUI filters for ISSI use slightly different thresholds but follow the same principle: total interest-bearing debt must not exceed 45% of total company assets, and non-halal revenue must be below 10% of total revenue.
JII vs JII70 vs ISSI: Which Should You Use as a Reference?
| Index | Number of Stocks | Best For | Limitations |
|---|---|---|---|
| JII (JII30) | 30 stocks | Large funds, institutions, those requiring very high liquidity | Too few options, overly concentrated in large-cap stocks |
| JII70 | 70 stocks | Active retail investors needing reasonable liquidity + more diverse choices | Still limited to large-to-mid cap stocks only |
| ISSI | ~400–500 stocks | Investors wanting broader exploration of syariah stocks including small caps | Many stocks are illiquid; requires stricter additional filters |
| DJIMI | Global | Investors who also want access to syariah stocks on Wall Street (S&P 500) | Different criteria from OJK; some stocks pass DJIMI but not ISSI |
Practical recommendation: Use JII70 as your starting universe for IDX stocks — broad enough (70 stocks) but already filtered for liquidity. Add DJIMI if you want access to US syariah stocks. Use ISSI for deeper exploration with additional technical filters.
Why "Just Being on the JII List" Is Not Enough
Problem 1: The List Is Only Updated 2× Per Year
Between revision periods (May and November), stock conditions can change drastically. A stock that made it into JII70 in November may no longer be in good shape by February — but it is still formally listed as a syariah stock until the next May revision.
Problem 2: Being on the List ≠ Good Technical Conditions
JII70 contains the 70 most liquid syariah stocks — but liquid does not mean in an uptrend. A stock can be in JII70 while in a distribution or markdown phase. Without technical analysis, you enter at the wrong time even though the stock is "halal."
Problem 3: Some Good Stocks Are Not in JII70
Some quality syariah stocks are not in JII70 because their market cap or volume does not yet meet the requirements — not because they are not halal. Investors who only use JII70 miss these opportunities.
Problem 4: Valuation and Fundamentals Are Not Checked
The best syariah stocks are not just those on the list — but those on the list AND fairly priced AND with strong fundamentals AND technically in the right momentum to buy.
Complete Framework: 4-Layer Filter for Choosing the Best Syariah Stocks
| # | Filter | How to Check | Tools |
|---|---|---|---|
| 1 | Halal Status | Included in ISSI/JII70 (OJK) or passes DJIMI filters for US stocks | OJK DES, syariah screener |
| 2 | Fundamentals | Piotroski F-Score ≥ 6, positive ROE, no new share dilution | Financial reports, fundamental screener |
| 3 | Technical & Momentum | Screener score ≥ 6 (BUY/STRONG BUY), Wyckoff Accumulation or Markup phase | Smart Money Analyst screener |
| 4 | Timing & Entry | RSI in the 40–70 zone, Donchian approaching upper band, positive CMF | Individual chart + ATR for SL/TP |
Core principle: Stocks that pass all 4 filters simultaneously are the strongest candidates. In practice, look for stocks that pass at least Filter 1 (halal) + Filter 3 (technical) + Filter 4 (timing). Filter 2 (fundamentals) becomes an additional consideration for medium-to-long-term positions.
Real Example: Evaluating 4 IDX Syariah Stocks
| Stock | In JII70? | Fundamentals | Technical Score | Wyckoff Phase | Decision |
|---|---|---|---|---|---|
| PGEO | Yes | F-Score: 7 | 9 (STRONG BUY) | Accumulation | STRONG Candidate |
| ADRO | Yes | F-Score: 6 | 7 (BUY) | Markup | Good Candidate — enter with smaller lot size |
| TLKM | Yes | F-Score: 5 | 5 (NEUTRAL) | Distribution | WAIT — technicals do not support entry despite being in JII |
| Stock X | Yes (ISSI) | F-Score: 3 | 3 (WAIT) | Markdown | AVOID — halal but in poor condition |
Notice TLKM in the example above: it is in JII70 (halal, liquid), but its technical condition and Wyckoff phase at that time did not support entry. Investors who only look at "included in JII70" would enter at the wrong time.
For a more detailed guide on reading technical scores, see How to Read STRONG BUY vs BUY Signals.
Practical Step-by-Step Guide to Choosing the Best Syariah Stocks
- Open the latest OJK Syariah Securities List (DES) or use a screener pre-filtered for JII70/ISSI
- Filter by sectors currently in a positive trend — avoid sectors in a major downtrend
- Check technical scores: prioritize stocks with BUY or STRONG BUY status in the screener
- Filter by Wyckoff phase: choose those in the Accumulation phase or early Markup — avoid Distribution and Markdown
- Check net foreign flow: for IDX, confirm that foreign investors are net buyers over the last 5 days
- Open the individual chart: confirm RSI is in the healthy zone (40–70), price is above EMA200, Donchian approaching the upper band
- Check the Piotroski F-Score: for medium-to-long-term positions, prioritize scores of 6–9
- Determine your entry, ATR-based stop loss, and take profit with a minimum R/R of 1:2
- Calculate position sizing — no more than 25% of capital in a single stock
- Record your reasons for entry and schedule periodic reviews, especially ahead of DES revisions (April and October)
Common Mistakes in Choosing Syariah Stocks
- Only looking at the JII list without further analysis — the list is a prerequisite, not a buy recommendation
- Not tracking DES revisions — stocks can be removed from the syariah list; existing positions need to be re-evaluated
- Equating syariah stocks with safe stocks — halal does not mean free from market risk; prices can still fall
- Only investing in JII30 — too concentrated in 30 large-cap stocks; better diversification comes from JII70 or filtered ISSI
- Ignoring DJIMI filters for US stocks — if you want syariah stocks on Wall Street, OJK rules do not apply; use the different DJIMI standard
- Not separating the halal decision from the buy decision — a halal stock bought at the wrong time and price can still result in losses
Conclusion
Choosing the best syariah stocks cannot stop at the JII list. That list only answers one question: is this stock halal? But there are three other equally important questions: are its fundamentals strong? Does the momentum support it? And is now the right time to enter?
Syariah investors who disciplinedly apply all four filters — halal status, fundamentals, technicals, and timing — will find that choosing the best syariah stocks is not about a limited selection, but about the discipline to choose only those that are truly ready to move.
With more than 400 stocks in ISSI and 70 in JII70, the universe is far larger than most syariah investors realize. The problem is not a lack of options — it is the lack of a framework for choosing correctly.
FAQ: How to Choose Syariah Stocks
Q: Do syariah stocks have lower returns than conventional stocks?
A: Not statistically. Research shows that syariah stock indices (JII70, DJIMI) have long-term performance competitive with conventional indices, particularly because syariah filters indirectly screen out companies with excessive leverage — which are precisely the companies most vulnerable during financial crises like 2008.
Q: What about syariah bank stocks like BRIS or BTPS — do they qualify as syariah stocks?
A: Yes, banks that operate fully on syariah principles (such as Bank Syariah Indonesia/BRIS and Bank BTPN Syariah/BTPS) are included in the ISSI and JII70 lists because their business is not based on conventional interest. This is different from conventional banks, which are automatically disqualified because their core business is based on riba (interest).
Q: How often should I check whether the stocks I hold are still on the syariah list?
A: At minimum twice a year, after OJK announces the DES revision — usually announced every May and November. Also monitor corporate news; major business changes (mergers, expansion into non-halal sectors) can affect a stock's syariah status even before the official revision is made.