The financial market in Malaysia is regulated by the Malaysian Stock Exchange, otherwise known as the Bursa Malaysia. It is the barometer of Malaysia’s financial situation and has a market capitalisation of $307 billion USD.
When it comes to economy, Malaysia has a small and quite open economy. When it comes to purchasing power parity, Malaysia comes in with the 34th largest economy worldwide. This open and growing market drives the financial scene within Malaysia.
Making an investment in the Malaysian stock market can be very advantageous, if you are well informed about which stocks to choose.
The History of the Stock Exchange in Malaysia
The Kuala Lumpur Stock Exchange began in 1930 when the Singapore Stockbroker’s Association began dealing in securities in Malaysia. It was registered as the Malayan Stockbroker’s Association in 1937 and later turned into the Malayan Stock Exchange in 1960.
With the secession of Singapore away from Malaysia, the stock market carried on to perform in the same way under the name “SEMS” or Stock Exchange of Malaysia and Singapore.
However, in 1973 the currency of Malaysia and Singapore were no longer interchangeable for investment and so the SEMS became separated into two different entities, the Kuala Lumpur Stock Exchange and the Stock Exchange of Singapore.
However, Malaysian companies were still listed on the Singapore Stock Exchange and Singaporean companies were listed on the Malaysian exchange.
These days, the stock exchange in Kuala Lumpur is known as Bursa Malaysia, as its name was changed in 2004. The Bursa Malaysia offers the full range of stock-exchange services including settlement, clearing, trading, investment and more.
Bank Negara Malaysia is the central national bank of Malaysia and there are also nine major commercial banks within Malaysia including RHB Bank, Cimb Bank, AmBank, Hong Leong Bank and Eon Bank.
Tips for Investing in the Malaysian Stock Market
Investing in the Malaysian stock market can be very rewarding, if you follow a few important guidelines. Here are a few helpful tips to keep in mind for making money on your investment in the stock market in Malaysia:
- Look to invest in companies which are consistent at making a profit over a period of several years. It is recommended to look at the history of a company over five years to see it is able to manage itself well and continuously make a profit.
- Although making a profit is a priority, preventing losses is even more important. Be careful about taking risks on new and unknown stocks.
- Diversification is the key to a strong stock investment portfolio. When you have a broad range of investments, your gains in some areas will balance out your losses in others. Putting all of your eggs in one basket is never a good idea.
- Do your research and find out who owns and manages the companies you are investing in. You should know whether they are trusted and whether they are managing the company well. When you know that the person in charge is good at what they do, you can have more faith in the company and in your investment.
- Avoid investing in any business unless you have a deep understanding of the product and its outlook. This especially applies to technology companies, which quickly become outdated and need to be constantly innovating to survive.
- Be patient. Think through your investments and consider your decisions carefully when making investments. Making hasty decisions without a lot of research behind them means that you are more likely to make a poor investment which can be a serious mistake.
These are just a few tips to keep in mind when investing in the stock market in Malaysia.
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James McCallan is a business writers and blogs about finance opportunities, small business accounting software by Intuit Malaysia and management. He has previously written for major publications in Asia and has also spoken at start-up events.