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If you’re Malaysian and new to investing, you’re probably wondering how to buy shares in Malaysia and open a Malaysian brokerage account. Or you could be a foreigner who wants to invest directly through a Malaysian brokerage firm and you’re thinking about which Malaysian brokerage to go with.
In either case, it’s important to pick a brokerage firm that suits your individual needs and preferences. As a value investor and Malaysian myself, here are six things I consider when I choose to how to buy shares in Malaysia and open a Malaysian brokerage account.
Let me explain the difference between a CDS account and a nominee account:
Before you open a brokerage account with a Malaysian broker, you first need to open a Central Depository System (CDS) account. A brokerage account allows you to trade shares through your broker. A CDS account records the ownership of Malaysian securities (i.e. stocks listed on Bursa Malaysia).
For example, you could have a brokerage account with both Maybank and CIMB, and you buy Stock A through Maybank and Stock B through CIMB. Even though you buy two different stocks via two different brokerages, you are listed as the direct owner of both stocks in your individual CDS account. As the direct owner, you enjoy certain rights as a shareholder which includes voting rights and the right to attend AGMs/EGMs.
For trust (nominee) accounts, Malaysian brokerages will use them to buy foreign shares on your behalf. For example, as a Malaysian, I can buy Singapore Exchange (SGX) shares through my Malaysian brokerage who will then place those shares in a nominee account assigned to me. As I don’t have a CDP account in Singapore (equivalent to the CDS account in Malaysia), I am not the direct owner of the shares in Singapore. In this case, I don’t get to vote or have the right to attend AGMs/EGMs for my Singapore stocks. But I’ll still continue to enjoy basic rights as a shareholder like receiving dividends and the option to subscribe to rights issue.
This is important to me as I invest both Bursa Malaysia (local) and SGX (foreign) shares. As such, I need a brokerage with the facilities to execute transactions for both local and foreign shares.
Besides Singapore, I may also be interested in stocks listed in Thailand, Hong Kong, Australia, Canada, and the United States. However, if you are only into local Malaysian stocks, then a brokerage which simply serves the local market will suffice.
In general, all brokerage firms in Malaysia are more or less similar in their service offerings. You are able to trade ordinary shares, preference shares, warrants, exchange traded funds (ETFs), exchange traded bonds and sukuk (ETBS), business trusts, stapled securities, and real estate investment trusts (REITs) listed on Bursa Malaysia. (Here’s a list of 11 Malaysian REITs that made money if you invested from their IPOs.)
As I write, options trading is not available on Bursa Malaysia. As for futures and derivatives trading, these activities are managed under Bursa Derivatives which is presently owned by Bursa Malaysia.
Personally, I’m a value investor who buys and accumulates good stocks at cheap prices over the long term. Why is this important when choosing a stockbroker? Because I believe it is important to set your personal investment goals and objectives before settling on a stockbroker.
To me, the role of a stockbroker is to help me complete the execution of my trades. It is not to provide me with stock tips, recommendations to buy/hold/sell any stock at any time. This is important because we must understand that the interests of your stockbroker may be different from yours. Ultimately, you want a stockbroker that follows your investment objective. If he understands that you’re a medium/long-term investor, he shouldn’t be calling you to offer with hot tips which do not help your investment objectives.
To me, I prefer online access over offline. It’s easy, convenient, and a lot cheaper. These days, trading platforms are designed in such a way that it is easy for you to trade stocks even if you are not an IT-savvy person. It is harder for you to make a mistake.
With that said, if you are unsure about any features on your brokerage’s trading platform, you can always call or WhatsApp your stockbroker for help. Thus, the key is to find a helpful stockbroker or trading representative. I also prefer if a brokerage firm has an office nearby, so it is convenient for me you make a trip down if ever require.
Below is a list of Malaysian brokerage firms and their minimum transactions fees for trading Bursa Malaysia shares:
|Brokerage||Up to RM100K||Above RM100K||Minimum Fees|
|Rakuten Trade||0.1%||Flat RM100||RM7|
|UOB Kay Hian||0.42%||0.21%||RM28|
At the moment, Rakuten Trade and Mercury Securities do not offer facilities to trade foreign shares.
The next step is to choose a brokerage firm, head down to their office, and have a representative help you open a CDS account (if you don’t already have one) and a new brokerage account. They will help complete the entire process for you.
Hopefully, I have given you some clear directions on how to buy shares in Malaysia and open a Malaysian brokerage account. If you have any questions I could help with, simply ask in the comments below and I’ll be glad to share what I know.
Happy investing! 🙂