How to buy shares in Malaysia

Share trading is the buying and selling of shares in publicly listed firms. Shares are single units of ownership in a business. When you purchase company shares, you become a part owner or shareholder. If you invest in shares following a strategy, you can accumulate profits over time. However, you may also lose if the price dives below a certain level.

What is share trading?

Share trading is the process of buying and selling company stocks to make a profit. Shares represent a portion of ownership in a public company, and their prices fluctuate based on the company's performance, market trends, and broader economic factors.

When you buy shares, you become a company's part-owner, entitled to potential dividends and capital appreciation. Most share trading occurs on stock exchanges, where shares are bought and sold outright. Online platforms have made it easier to trade from anywhere. Trading can be short-term, focusing on quick profits from price movements, or long-term, where investors hold shares for years to build wealth gradually.

How does it work?

Company performance, market conditions, and investor sentiments are just a few factors that can influence a stock's fluctuating price. Since the dynamics of supply and demand dictate price movements, this explains why prices might fluctuate throughout the trading day.

The shares you buy will be kept in a broking account that you own after the purchase. You can instruct your booking to sell your shares at a specified price whenever you're ready. If the buy price and the amount you specified in your sell order are identical or more significant than what the share is currently selling for, then the sale will go through.

Novice stock traders should be aware that there is always a chance of losing money when dealing with the stock market. Investors participate in share trading with the expectation of making a profit by selling shares at a price higher than their initial investment.

How to buy shares in Malaysia

To purchase stocks in Malaysia, you must open a Central Depository System (CDS) account with an authorised agency, broker, or platform. Numerous bank brokerages and independent broker services are available, and various CDS accounts exist. Trading, primarily online, is simple after identifying the best broker for your investing needs.

The stock market is the meeting point for firms and individuals interested in buying and selling shares. Here, in Malaysia, we have Bursa Malaysia; nevertheless, many other well-known worldwide stock exchanges exist, such as the NYSE and the HKEX.

What to consider when opening a brokerage account

Your needs and interests should guide your selection of a company. If you're an investor looking for a brokerage account to buy shares in Malaysia, remember these six factors.

CDS vs. nominee account

A Central Depository System (CDS) account is required before a brokerage account when a Malaysian broker is opened. With a brokerage account, you can work with a broker to buy and sell stocks. Those who possess securities listed on Bursa Malaysia, such as equities, can keep track of their holdings in a CDS account.

Take Hong Leong Bank and CIMB as possible broking accounts; you might use Hong Leong Bank to purchase Stock A and CIMB to purchase Stock B. Even though you purchase two equities through separate brokerages, your CDS account will show that you are the only owner of both stocks.

Stocks in Malaysia can be purchased on your behalf by Malaysian brokerages via trust (nominee) accounts. One option is to use a Malaysian broker to purchase shares on the Singapore Exchange (SGX). The broker will then assign you a nominee account to hold these shares.

Those who do not possess a Malaysian bank account are not permitted to open a CDS account. Opening a bank account might be a hassle for some individuals, so a nominee account would be the best option in such cases.

Offline and online access

There are more significant advantages to online access compared to offline access.

First, it's less expensive, more convenient, and more manageable. Even if you lack technical expertise, you should have no trouble using one of these days' trading platforms to buy and sell stocks. You have a more difficult time making a mistake.

However, if you have any questions regarding the functionality of your brokerage's trading platform, you may always contact your stockbroker's customer service department for assistance. Finding an accommodating broker or trade representative is, thus, crucial. If a broking firm has an office in the area, it will be easy to drop by whenever needed.

Types of investment products

Most broking firms in Malaysia are relatively standard regarding the services they provide. Shares of common stock, preferred stock, warrants, exchange-traded funds (ETFs), and other securities are all available for trading on Bursa Malaysia.

The country's government controls Bursa Malaysia Derivatives and oversees commodity, equities, and financial derivatives trading, including futures and options.

Market access

This information will be helpful to those planning to buy shares in the local Bursa Malaysia and the overseas SGX markets. Therefore, it is necessary to work with a broker to facilitate trades in domestic and international shares, including those listed in countries like Canada, Australia, and Hong Kong. On the other hand, a broker focusing solely on the Malaysian market will be more than enough if you're all interested in Malaysian stock.

If you do not possess the necessary citizenship or residency to trade foreign shares, it is common practice to register a nominee account on your behalf. Payments made to your nominee account may incur additional costs, such as those charged by corresponding or intermediary banks, besides broking and custodian fees. These additional costs might mount up quickly.

Role of a stockbroker

A stockbroker on the stock market or over-the-counter purchases and sells shares of stock and other assets on behalf of institutional and retail clients for a fee or commission. Although ordinary investors exist, institutional stockbrokers mainly deal with fund managers and other financial organisations.

As a person with your own set of goals and objectives, you should look for a stockbroker committed to helping you achieve your investment goals. He shouldn't contact you with hot suggestions that won't help you achieve your investing goals if he knows you're an investor with a medium to long-term horizon.

Brokerage fees

In Malaysia, brokerages typically charge clearing fees of 0.033% and stamp duty. The cost of every brokerage order is fixed at a maximum of RM1,000. In addition, the fees incurred for this service are typically capped at 0.25 to 1% of the value of the trading itself.

Final thoughts

• Share investing is a good choice for individuals with long-term wealth-creation goals. When you buy company shares, you become a part owner or shareholder. Later, you can sell these shares and make gains from the price difference.
• In Malaysia, various brokerage firms offer platforms for trading shares. These platforms make it easy and affordable to trade stocks and shares locally and globally. Always check with a currency exchange firm like Wise to see if they can help you save money using the mid-market rate and low, transparent fees when dealing with foreign currency.
• While investing isn't without its hazards (you should consult an expert to help you manage your funds wisely), it also has the potential to yield substantial returns. Select a reliable brokerage and start small to avoid significant losses.