How to Buy Stocks in Malaysia
To buy stocks in Malaysia you need: choose a well-regulated stock broker, submit documents for verification, fund your account, and start trading.
Investment in the Malaysian stock market, a tempting option for many Malaysians, can help you find the path to financial security and growth. If you're new to stock trading and find the terrain difficult to navigate, fear not. This comprehensive guide has been created by TU experts to help you through the process. Whether you're a beginner or aiming to refine your knowledge, TU experts will walk you through the fundamentals of purchasing stocks in the Malaysian market in this article.
How to buy stocks online in few easy steps
1. Choose an online stock broker
To begin investing in stocks, you need to select an online stock broker. Look for a broker that offers a user-friendly interface, low fees, good customer service, and a wide range of investment options. It is essential to ensure that the broker is regulated and operates within your country's jurisdiction.
For beginners, brokerages with extra benefits such as social trading can be invaluable as they offer opportunities to learn from experienced traders, as well as study best strategies. Additionally, access to comprehensive educational resources, fractional shares trading, and a diverse range of ETF investment options can further empower beginners in making well-informed and diversified investment decisions.
2. Sign up for an account
Once you have chosen a suitable broker, you'll need to sign up for an account. The registration process typically involves providing your personal information, which may include:
Your full name;
Address and contact details;
Date of birth;
Social Security number (or equivalent);
Proof of identification (such as a driver's license or passport);
Employment and material status information is optional.
Keep in mind that some brokers might require mandatory verification of your identity and documents.
Rules and Regulation
Licensing in Malaysia
Forex trading in Malaysia is regulated by the Securities Commission Malaysia (SC) under the Capital Markets and Services Act 2007. The regulatory framework aims to ensure market integrity, investor protection, and financial stability in the Forex market. Investors should trade with licensed brokers, conduct due diligence, and stay informed about their rights and protection to mitigate risks associated with Forex trading.
Investor protection in Malaysia
Forex investors in Malaysia are protected by the Securities Commission Malaysia (SC), which regulates the Forex market and ensures the integrity of the financial system.
Malaysia has policies to protect Forex investors:
- licensing of Forex brokers;
- restrictions on Forex trading.
Taxation in Malaysia
Forex taxation in Malaysia is governed by the Inland Revenue Board Malaysia (IRBM), which administers the country's tax laws. Forex traders are required to report their trading income to the IRBM and pay income tax on their profits at the applicable tax rates. Malaysia has progressive income tax rates, ranging from 0% to 30%, depending on the individual's total taxable income.
How do I sell my stocks in Malaysia?
To sell your stocks in Malaysia, follow these steps carefully highlighted by TU experts:
Open a trading account: First, ensure that you have a trading account with a registered brokerage firm in Malaysia. If you don't have one, you can open one by providing the necessary documents, such as identification, proof of address, and financial information.
Check stock holdings: Log in to your trading account and check your stock holdings. Make sure you have the specific stocks you wish to sell in your portfolio.
Determine the selling price: Analyze the current market price of the shares you want to sell. Decide on the selling price based on your investment goals and market conditions. You can place a market order to sell the shares at the prevailing market price or set a specific price with a limit order.
Place a sell order: In your trading account, find the option to place a "Sell Order." Enter the quantity of shares you want to sell and the selling price. Review the details and confirm the order.
Verify the order: After confirming the order, your brokerage platform will display a summary of the sell order with all relevant details. Review this summary carefully to ensure accuracy.
It's important to note that the process of selling shares may vary slightly depending on the brokerage platform you are using. If you are unsure about any step, seek assistance from your brokerage's customer support.
What are the benefits of buying stocks in Malaysia?
Investing in the Malaysian stock market provides attractive benefits for investors, as there is potential for high returns through capital appreciation as companies grow. One of the benefits is that there are opportunities for diversification across numerous industries, which helps lower risk and offset potential losses. Additionally, investors can earn dividend income from profitable companies. Malaysia is a developing market and offers higher growth potential, benefiting listed companies and potentially yielding higher returns. Overall, the Malaysian stock market offers prospects for enticing returns, diversification, dividend income, liquidity, and exposure to the expansion of an emerging market, all supported by reliable regulations.
Is it safe to buy stocks online?
Yes, in general, stock investing is safe, but you should learn some basic safe investing rules that will help protect your money.
Research and select a well-established, reputable online brokerage platform with a track record of security and customer satisfaction.
Buy stocks using a secure internet connection, preferably your private home network, to reduce the risk of unauthorized access or data interception.
Create strong and unique passwords for your brokerage account, incorporating a combination of letters, numbers, and special characters.
Enable 2FA whenever possible. This adds an extra layer of security by requiring a second form of verification, such as a code sent to your mobile device, before accessing your account.
When funding your brokerage account or making transactions, use secure payment methods such as bank transfers or credit cards. Avoid sharing credit card details directly with third parties.
Be cautious about sharing unnecessary personal information online, especially on social media platforms, to minimize the risk of identity theft or fraud.
Keep a close eye on your brokerage account's activity. Regularly review statements and transaction history for any unauthorized or suspicious transactions.
Educate yourself about common stock frauds and phishing attempts related to stock trading.
By implementing these safety measures, you can significantly enhance the security of your online stock buying activities and safeguard your investments and personal information from potential threats and cyberattacks.
Best stock brokers in Malaysia
1. RoboForex
RoboForex is an award-winning Trading App with over 4.56 Million clients from over 160 countries worldwide. It is an app with many features and an easy-to-use interface for novice and professional traders. A novice trader can copy signals easily and trade with them.
Key features
Account Currency: | USD, EUR, GOLD, CNY, BTC, ETH, USDT; |
Minimum Deposit: | From $10; |
Leverage: | 1:2000; |
Spread: | Floating from 0 pips; |
Instruments: | Forex (currency pairs), ETFs, index CFDs, oil CFDs, CFD on European and U.S. stocks, cryptocurrency CFDs, real securities; |
Number of Stocks | 3,000 stocks + over 9,000 CFDs; |
Commission | From $0,009 per lot. |
👍 Pros
👎 Cons
•Pro circumstances are not as good as Prime or ECN.
•Costs for Fund withdrawals.
•The minimum deposit is $10.
2. IC Markets
The affordable cost and scalable execution of IC Markets make it an excellent choice for algorithmic traders. Although it supports a wide variety of third-party plugins and tools, IC Markets' research and educational offerings fall short of those provided by leaders in the field.
Key features
Account Currency: | USD, AUD, EUR, GBP, SGD, NZD, JPY, CHF, HKD, CAD; |
Minimum Deposit: | From $200; |
Leverage: | 1:1 to 1:500; |
Spread: | Floating from 0.0 pips; |
Instruments: | Foreign exchange, commodities, indices, shares, bonds, futures, cryptocurrencies; |
Number of Stocks: | 10,000+; |
Commission: | Spread based. |
👍 Pros
•It is a safe broker (average risk) for trading Forex and CFDs because it maintains regulatory status in one tier-1 jurisdiction and one tier-2 jurisdiction.
•It offers low average spreads and competitive pricing for all account types.
•The IC Markets MetaTrader offering is improved with plugins for third-party research and trading tools.
•IC Market was the top-ranked MetaTrader broker for the 2023 Annual Awards
•It has dramatically increased the number of markets it offers, from 204 symbols to more than 3,500.
👎 Cons
•Regarding the range of its market research and the standard of its educational content, it trails the finest Forex brokers.
•It has no app for proprietary trading.
3. eToro
In 2007, the eToro broker was established. The company advertises itself as a social trading platform that partners with traders in over 140 nations. The broker has several divisions authorized by various regulators and operating under various jurisdictions.
eToro is the leading broker in the Forex and CFD trading platform market. It has conquered 20 million users. Traders rank eToro as a top trading app due to the following:
it's great ease of use;
Its copy trading offer.
The virtual trading application is available on iOS (iPhone) and Android (ex: Samsung). It includes social trading.
From the trading software, the trader accesses:
its account;
its balance;
copy trading features (Copy Portfolio).
Key features
Account Currency: | USD; |
Minimum deposit: | $200 (50$ for clients from the U.K.); |
Leverage: | 1:1 to 1:30; |
Spread: | 0.1 pips; |
Instruments: | Currencies, cryptocurrencies, assets of stock, and commodity markets; |
Number of Stocks: | 2,400+; |
Commission: | No commission on stock. |
👍 Pros
•0% commission on cash shares.
•Relatively low spreads on other assets (CFDs).
•The best platform to start trading.
•Smart Portfolios.
👎 Cons
•$5 fee per withdrawal.
•Quickly limited for an advanced trader.
Can Malaysians trade stocks with international brokers?
Yes, Malaysian investors have the opportunity to trade stocks with ease through international brokers. Thanks to the availability of numerous reputable online brokerage platforms, Malaysians can confidently open accounts and engage in trading activities on various global stock exchanges. To ensure a seamless and secure trading experience, it is essential for investors to cooperate with trusted companies, such as eToro and other reputable brokerage firms. By partnering with established names in the industry, investors can confidently navigate the world of international stock trading.
What is the minimum stock investment in Malaysia?
In Malaysia, the minimum stock investment varies depending on the brokerage platform and the specific stocks you wish to invest in. Generally, local brokers may require a lower initial investment compared to some international brokers. As for the money needed to start trading in Malaysia, it is recommended to have a sufficient amount to cover brokerage fees, transaction costs, and potential losses. A conservative estimate would be to start with at least a few hundred to a few thousand Malaysian Ringgits (MYR). However, to have a more substantial and diversified portfolio, it is advisable to have a starting capital of around 5,000 to 10,000 MYR or more, according to Traders Union experts.
Can I trade fractional shares?
Yes, you can! Fractional shares allow investors to purchase a portion of a single stock rather than a whole share. This is particularly beneficial for those who may not have enough funds to buy full shares of expensive stocks. With fractional shares, you can invest in high-priced stocks like Amazon or Google even if you don't have enough money to buy one full share. eToro, among other brokers, facilitates fractional share trading by breaking down the shares into smaller, more affordable units.
For instance, if a single share of a company costs $1,000 but you only have $100 to invest, eToro will enable you to own 10% of that share. This feature opens up a world of possibilities, allowing investors to diversify their portfolios across multiple companies and industries without the need for significant upfront capital. Fractional share trading is a user-friendly and accessible way for individuals to participate in the stock market, regardless of their budget or investment size. It's a great option for both seasoned investors looking to diversify further and new investors aiming to enter the market gradually.
Are capital gains or dividends taxable in Malaysia?
In Malaysia, capital gains from stocks are not taxable, providing investors with tax-free returns. Regarding dividends, Malaysia operates a single-tier tax system, where companies pay taxes on dividends before distribution to shareholders. Though dividends received are typically tax-exempt for investors, it is advisable to retain dividend vouchers and declare the income for transparency. This tax-friendly environment allows investors to maximize their gains and dividends without additional tax burdens, fostering a favorable atmosphere for investment growth.
FAQ
How do beginners buy stocks in Malaysia?
Beginners can buy stocks in Malaysia by opening a trading account with a brokerage, funding it, researching stocks, and placing buy orders through the brokerage platform.
Can foreigners invest in the stock market in Malaysia?
Yes, foreigners are generally allowed to invest in the stock market in Malaysia. However, there might be some restrictions or additional requirements depending on their nationality and the type of investment.
How much money do you need to invest in stocks in Malaysia?
The amount of money needed to invest in stocks in Malaysia varies depending on the stock's price and the investor's financial goals. Some stocks may be more affordable, while others may have higher prices.
How can I open a stock account in Malaysia?
To open a stock account in Malaysia, first, select a reputable stock brokerage that aligns with your requirements. Complete the account opening form provided by the brokerage, submitting essential documents like identification and proof of address. Once the form and documents are submitted, the brokerage will review and approve your account. After approval, you will receive the necessary login credentials and information to start trading via their online platform or other available channels.
Team that worked on the article
Winnifred Emmanuel is a freelance financial analyst and writer with years of experience in working with financial websites and businesses. Her expertise spans various areas, including commodities, Forex, stocks, and cryptocurrency. Winnifred tailors her writing to various audiences, including beginners, while also providing useful insights for those who are already familiar with financial markets.
Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).