How to Buy Stocks in Malaysia 2023

Summary

According to Encyclopedia Britannica, Malaysia has one of the largest and fastest-growing economies in South-East Asia. It is one of the most diversified, with many companies in the country focused on the production and exportation of some of the most important materials used worldwide.

The stock market in Malaysia is also very prominent, as there are 4 major exchanges worth billions in market capitalization. The biggest stock exchange in Malaysia is the Bursa Malaysia, previously known as the Kuala Lumpur Stock Exchange. There are almost 1,000 listings on this stock exchange, and it is worth about $400 billion in market capitalization. Many Malaysians trade stocks on this stock exchange, however, they are not limited to this exchange alone.

Malaysians and other people living in the country can buy stocks from the New York Stock Exchange (NYSE), NASDAQ, and other top global exchanges with the help of online stock brokers. 

In this guide article, we will look at how to buy stocks from Malaysia and how to go through the process of buying Malaysian and foreign stocks in the country using online stock brokers. We will also look at all the characteristics of brokers to look out for when comparing so that you can have the best pick; account opening process, trading platforms, fees, and commission. We will also talk about which stocks to buy and the risks associated with stock trading. Finally, we will look at some opinions of traders on Reddit and Quora, who have traded in Malaysia. 

How to Buy Stocks from Malaysia in a Few Steps?

Buying shares from Malaysia involves some major processes, which should be carried out after choosing a broker from the table above. Here are the steps:

1. Open a Share Dealing Account
2. Deposit Funds 
3. Research and Pick Your Shares 
4. Select the Order Type 
5. Activate the Order and Buy your Shares

What Markets can you Buy Stocks from in Malaysia?

The Malaysian Stock Market is very prominent, with the largest stock exchange, Bursa Malaysia having about 950 companies listed on it. However, Malaysians and other foreigners who live in the country are not limited to Bursa Malaysia only. 

Bursa Malaysia is the largest stock market in Malaysia and one of the largest in South-East Asia. There are about 950 companies listed on this stock exchange, including Tenaga Nasional Berhad, Public Bank Berhad, CIMB Group Holdings Berhad, and Petronal. Overall, the stock exchange has a market cap of over $390 billion.

Stock traders in Malaysia can also buy stock from global exchanges like the New York Stock Exchange, NASDAQ, London Stock Exchange, and many more, using online brokers like ThinkMarkets and Evest, which are registered and regulated within Malaysia.

What are the Normal Fees for Buying Stocks from Malaysia?

When buying stocks in Malaysia, you need to take note of the fees and commissions you have to pay the stock brokers you choose. Depending on the broker, you may have to pay trading and non-trading fees to use their services when trading stocks. Some of the fees you should be aware of when buying stocks in Malaysia are:

Spreads

A spread is the difference between the ask and bid price of an asset, in this case, a stock. Spreads are often expressed in pips, which are the lowest units for determining the change in the value of an asset. When trading stocks, spreads are the most common fees you will encounter. They differ from one broker to another, so you may have to go through a few brokers to select the best one with a tight spread.

Commission

Some brokers will charge you a percentage of your trade as a commission for providing you with a platform to trade with. Like other fees, the commission charged by a broker depends on the broker, so they vary widely. A broker like Degiro, for example, charges a 1 € handling fee when trading US stocks. On the other hand, there are brokers like Evest and ThinkMarkets that are commission-free, i.e., they don’t charge commissions for trades made on their platforms.

Deposit and Withdrawal Fees

These fees are charged to your trading account when you deposit or withdraw money. Evest doesn’t charge for deposits, but they charge $5 for every withdrawal.

Inactivity Fees

These fees are deducted from your account when you leave your account dormant for a long period, usually 6 months or more. Some brokers don’t charge this fee, so check before you register with a broker. Evest charges $75 after the second month of inactivity and lowers it to $50 on the third.    

Overnight Fees

Brokers charge overnight fees for holding positions overnight, and the fees vary based on the broker’s policy and the asset being held.

Conversion Fees

These are fees charged by the broker to help traders convert currencies to the ones accepted by the platform. Evest collects 2% of the transaction as conversion fees.

Pros and Cons of Buying Stocks from Malaysia

Here are the pros and cons of buying stocks from Malaysia:

How to Choose the Broker I Need to Buy Stocks from Malaysia?

The broker with which you choose to invest in the stock market in Malaysia is a big factor in determining how successful you will be in stock trading. Each broker comes with its own pros and cons, so it might be difficult to select the right one. However, there are characteristics to watch out for that can help make this selection process easier. 

Here are some of the characteristics to look out for when choosing a broker to trade stocks with in Malaysia:

Regulation

Financial trading is very sensitive. Some people may lose loads of money due to careless decisions by trading institutions. For this reason, many countries mandate that these financial institutions (like brokers) be regulated by bodies within the region. For example, the SEC, FINRA, and NFA regulate stock trading brokers in the United States, the FCA regulates brokers in the United Kingdom, and the ASIC does the same job in Australia. 

The main body that regulates the financial industry and the stock market in Malaysia is the Securities Commission. Before you use any broker in Malaysia to trade stocks, check that it is regulated by the Securities Commission. If you live outside Malaysia, check that the broker you want to use is regulated by the relevant regulatory body. An example of a broker regulated by the Securities Commission Malaysia is the Kenanga Investment Bank.

Markets

Trading with the companies on the Bursa Malaysia is great, but you also want to be able to diversify your portfolio by trading global markets. This is why it is important to check that your broker offers you access to global markets like the NYSE, NASDAQ, London Stock Exchange, and many others.

Thankfully, Malaysians can access these markets through brokers like Evest and ThinkMarkets. Check for other brokers that allow you to do this before creating an account with them. 

Platforms

Trading platforms are computer software used by brokers to allow people to access the stock market. If you’ve been trading for a while, you are probably used to trading platforms like MT4, MT5, and cTrader. But some brokers have their own proprietary trading platforms that they made for their traders. These custom platforms are more flexible than the popular ones and many traders like them for buying stocks in Malaysia.

A good characteristic of a trading platform is that it should have charts, news, notifications, and other essential tools for technical and fundamental trading analysis. Check your broker to see the trading platforms they offer before you start trading with them. This could ensure a better trading experience when buying stocks from Malaysia.

Offering

Stock trading usually involves the trading of either real shares or stocks CFDs. Real shares represent part ownership of a company and are the system of trading most people know. However, there are some downsides to trading real stocks that some investors would love to avoid. Stocks are often capital-intensive and require a reasonable amount of money to trade with. Trading real stocks also requires that you fully own the stocks and therefore bear the risk when the stock price goes down. Trading real stocks has a ton of benefits too, but some traders find these downsides a bit too much to bear.

And as for CFDs. Contracts for Difference are contracts between the trader and the broker, which allow the trader to speculate on the future price of an asset, in this case, a stock. Traders don’t have to buy and own a whole stock, and they can gain money if the stock goes down, as long as they bet that it would happen. 

CFDs have their own downsides too. Because they use leverage to trade, traders could lose all their investments and even land in debt if their broker doesn’t offer them negative balance protection. 

Before choosing a broker, check that the broker offers real stocks and CFDs. You can choose the one you want to trade when you register with some brokers, while other brokers offer only one option. Brokers like Evest and Thinkmarkets offer only CFDs to traders in Malaysia. 

Trading Commission

Brokers often charge commissions for making transactions on their platforms. These commissions are small percentages on amounts you trade with on some brokers, like Degiro. However, there are brokers like Evest and ThinkMarkets that do not charge commissions for trading on their platform. Check the broker you wish to trade with to see if they charge commission or not. 

What are the Popular Trading Platforms used to Buy Stocks from Malaysia?

As mentioned earlier, a trading platform is a piece of software used to connect traders to the stock market. Trading platform also provides tables, chats, news, real-time notifications, and other tools necessary for traders to do technical and fundamental analysis.

There are two major classes of trading platforms, proprietary trading platforms and third-party trading platforms. While proprietary trading platforms are exclusive to the broker who creates it and the traders registered with that broker, open trading platforms like MetaTrader are open to all brokers who wish to use them.

Proprietary trading platforms have grown in popularity in recent times, with big brokers like ThinkMarkets having their own customised trading platforms exclusively for their traders. They are often preferred for stock trading, because of the kind of flexibility they offer.

There are also third-party trading platforms like MetaTrader and cTrader, which offer their platforms to brokers to use. These trading platforms are less customizable and non-exclusive, however, they offer a lot of helpful tools which has made them popular across the trading space. One standout third-party platform is MT5, which is one of the most favourable platforms for stock trading worldwide.

In this section, we will look at the proprietary trading platforms and the MT5 (MetaTrader 5).

Proprietary Trading Platforms and Apps

Proprietary trading platforms are platforms created by brokers exclusively for the customers registered with them. This means you cannot find one broker’s trading platform on another broker. They have gained massive popularity in recent times because of their flexibility and easy customization.

Proprietary trading platforms are available on both desktop and mobile devices. Traders can access tools that are important for fundamental and technical trading analysis, like charts, price history, news, and so on. You can also receive real-time news and notifications for trading on-the-go on the proprietary trading apps on your phone.

MT5 Platform & App

MetaTrader 5 (or MT5) is a third-party trading platform built by MetaTrader. It is very fast and offers many trading tools that make it good for buying Malaysian stocks or any other foreign stocks. This is probably why it is the most used platform for stock trading worldwide.

MT5 provides great charts, tables, a clear activity dashboard, data visualisation, and other important trading features. Like proprietary trading platforms, the MT5 platform is available on mobile and desktop devices, so you can always trade at home or on-the-go.

Why should I Buy Stocks?

Many financial advisers tout stocks as some of the best investment vehicles available, but is this true? Insteading of focusing on how to buy stocks in Malaysia, in this section, we will look at why you should buy shares and if it is the right investment for you.

Here are some reasons why you should buy stocks:

Long-term Growth Potential: Stocks have the potential to grow over the long term. Stocks like Amazon, Apple, and Tesla have appreciated over the long term and have increased the capital of traders who invested some years ago. It is important to note that this can be a slow and steady process over the years, so it is a good option for people who are in it for the long term.

Dividends: For stock-paying dividends, traders can receive a small pay for each stock every quarter or every year, depending on the company. These dividends could also be stock dividends, meaning the company gives more shares to the investor as opposed to cash.

Liquidity: Stocks are highly liquid, meaning they can be bought and sold quickly with low transaction costs. In contrast, selling art or real estate can take months or even years and involve high transaction costs, making stocks more flexible and accessible as investments..

Is Buying Stocks Worth the Risk?

Statistics have shown that the vast majority of stock traders will quit the stock market without making any profits, and only about 1% of traders make good profit. This is not because buying Malaysian stocks or any other type of stocks is bad, but because many traders don’t learn about the risks in buying stocks and how to manage them. 

There are good stocks which have grown over time since their IPOs, but traders who weren’t patient and didn’t know how to manage risks lost out on reaping the benefits of these rewards. One good example is Amazon, which had a $0.090 price per stock on its IPO. Today, Amazon’s stock price is over $100, which is over 100× its IPO price. 

This is not to say that all investments will pay off in the long term. However, with the right trading strategies and a good understanding of the market, you can dramatically reduce your risk and give yourself a good chance to make trading in the stock market worth it. 

What Reddit and Quora Say About Buying Stocks from Malaysia

We went through two important social communities, Reddit and Quora, to learn what they thought about buying shares in Malaysia.

Reddit

Reddit is one of the world’s largest social communities with over 500 million users. These users (referred to as Redditors) discuss a wide range of topics, including stock investing in Malaysia. We went through a few Reddit threads and picked up a few ideas on how to buy stocks from Malaysia.

The first thread we saw was on a subreddit called r/Malaysia where a redditor asked for guidelines for trading stocks in Malaysia as a college student.

One redditor advised the original poster (OP) to focus on diversified investments when thinking of investing in Malaysia. They advised the OP to consider putting some of their money in a fixed deposit and Unit trust, and the remainder in stocks. According to them, this helps the investor learn about investing without much risk and compound interest before choosing to do stocks.

Another redditor advised the OP to use the FSMOne broker, an online unit trust and trading platform in Malaysia. He encouraged the OP to learn more about unit trusts, as most of them only need about RM 1000 (1000 Malaysian Ringgits) to start.

Quora

Just like Reddit, Quora is a popular online community where millions of users talk about a wide range of topics, like personal finance and stock investing. We found a few threads that talked about investing in stocks in Malaysia.

On the first thread we saw, a Quora user asked how they could start buying stocks from Malaysia. Another user responded with a quick breakdown for the original poster (OP) to assist them in getting started with how to buy foreign stocks in Malaysia. According to the Quora user, the OP needed a Central Depository System (CDS) account, which is just like a bank account for the shares. Each Malaysian is entitled to have one CDS account for every broker they register with. After opening a CDS account, you can start trading. According to this user, when trading stocks in Malaysia, “Right stock, right timing will make money. Wrong stock, wrong timing will lose money.” 

On another thread, a user asked for the best stocks to buy in Malaysia with good long-term prospects. Another user explained that while Malaysian stocks are not as competitive in the foreign market as stocks from America or other powerful countries, there are a few major stocks you can trade in Malaysia with long-term prospects. Some of them are: Mi Technovation, Guan Chong Berhad, RCE Capital, Dialog and DuoPharma. 

Bottom Line

Malaysia is a large and fast-growing economy in South-East Asia, with some of Asia’s most important companies. Its largest stock exchange, Bursa Malaysia has over 950 companies and is worth almost $400 billion. Malaysians can choose to invest in the Bursa Malaysia, or any of the numerous global exchanges available to them worldwide.

When choosing a broker to trade stocks in Malaysia, it is important to look at some characteristics of the broker like its regulation, fees and commissions, stock offerings, and platforms available. The two types of platforms available are proprietary and third-party trading platforms, and either one can be good enough for stock trading depending on your needs. 

When thinking of how to buy stocks from Malaysia, traders should be focused on reducing risk by using the right brokers and getting the right understanding of the stock market.