The amount of things that one would have to know to start investing in the Malaysian stock market successfully can be quite daunting. Hence, we’ve prepared a basic list of things that would help you get started with your journey.
#1 Fundamental Analysis
Fundamental analysis is the art of evaluating businesses based on their foundations and core numbers. As its name suggests, fundamental analysis involves looking at a business’s fundamentals such as market size, market potential, strength of management team, yearly revenue growth and strength of product offering among other core business metrics to determine a stock’s value.
Fundamental investors usually take a long view on their investments and only invest if they believe in the potential of the business to grow in the long run. Famous investors like Warren Buffet are known fundamental investors.
#2 Technical Analysis
Technical analysis is the art of studying stocks based on past market data such as price, trade volume and fluctuation patterns. It usually involves the use of charts, formulas and takes into account things like moving averages.
It is extremely useful in identifying trends and patterns in the market or predicting key inflection points. With sufficient data and proven algorithms, technical analysis can be surprisingly accurate in predicting short term market behaviour.
#3 Economic Cycle
An economic cycle is a cycle that the economy goes through time and time again as it repeats itself over a period of 7-10 years. The phases of an economic cycle includes bust, boom, stagnation and then bust again.
Read Also: What Is An Economic Cycle And How Can You Profit From It?
#4 CDS Account
A CDS account is an account that you will have to have if you want to invest in the stock market. It is the account that holds the stock that you purchase from the stock market. CDS stands for Central Depository System.
Read Also: What Is A CDS Account?
#5 E-Trading Account
An e-trading account is an account that allows you to buy and sell stocks on the stock market online. Most e-trading platforms also allow users to configure stop-loss mechanisms and perform technical analysis on real-time market data.
#6 Long Position
A long position means that you would like to buy and hold a certain stock in anticipation that the value of the stock will go up.
#7 Short Position
A short position means that you would rather borrow a certain amount of stock and buy them back at a later date to return the amount that you owe in anticipation that the value of the stock will go down. However, it is important to note that short-selling is not allowed in the Malaysian stock market.
#8 Dividends
Dividends are payouts declared by companies as a way to distribute earnings to the company’s shareholders.
#9 A Prospectus
A prospectus is a document stating the nature, performance and key performance statistics of a business that is listed on the stock market. A good way to learn more about a public listed company is to get hold of a copy of that company’s prospectus.
#10 P/E Ratio
P/E ratio stands for price to earnings ratio. It is the ratio of a company’s share price to its per-share earnings. A company’s P/E ratio can give us a hint as to whether a company is overvalued or undervalued when compared to its peers in a similar industry.
#11 What is T + 3?
T + 3 stands for 3 working days from the time a stock trade is made. Stocks purchased would be credited into the buyer’s CDS account by 9am T + 3 days and payment needs to be made by 12.30pm on the same day (T + 3). Weekends and public holidays are not counted towards the 3 days.
#12 How Much Is 1 Lot In Bursa Malaysia?
In Bursa Malaysia, 1 lot of shares is the minimum amount one would have to purchase when making a trade. 1 lot of shares equals to 100 shares. Hence, if the share price of a stock is RM7, the cost of 1 lot of shares would be RM700, not including transaction fees and stamp duties.
#13 Clearing Fees, Brokerage Fees And Stamp Duties
They are fees that would be incurred whenever a stock trade is being made. Typically, brokerage fees would not exceed 0.7% of the value of total shares traded, but varies from firm to firm. Clearing fees usually amounts to 0.03% of the contract value subject to a cap of RM200. Lastly, stamp duty stands at RM1 for every RM1,000 worth of shares.
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