When looking to invest, the local Malaysian stock market is a great choice. By adding equities to your portfolio you can add variety to your investments. This diversity will improve the chances of generating higher portfolio returns.

What to know before buying equities

The Malaysian Stock Exchange is known as Bursa Malaysia and is based in Kuala Lumpur.

The Bursa Malaysia exchange is a moderately liquid market which means there are choices of different equities to buy and sell and different people for you to buy and sell with.

The normal trading hours are from 9.00am to 12.30pm and 2.30pm to 4.45pm – with a two hour lunch break in between.

How the stock exchange works

All trading on Bursa Malaysia takes place through electronic automated systems. Within the Bursa Malaysia there are a number of different trading markets. The main ones are:

• Bursa Malaysia Securities Bhd – a securities exchange and related services. Within Bursa Malaysia Securities Bhd there are two separate markets – the Main Market which lists 823 companies and the Ace Market which lists 117 companies.
• Bursa Malaysia Derivatives Bhd –a futures and options exchange and related services.
• Labuan International Financial Exchange Inc – an offshore financial exchange and related services.

Lot size for stocks

For trading in this market the minimum order size or lot size, is 100 shares.

Major sectors of the stock exchange

The dominant sectors for investment in Malaysia are banking and finance, oil and gas and electronics and technology companies.

The biggest stocks are Public Bank Bhd and Tenaga Nasional followed by Malayan Banking. These are popular and well-established equity investment choices known for stable returns and low risk.

Major indices for stocks

The FTSE Bursa Malaysia Index is a range of indices formed by Bursa Malaysia and the FTSE Group.

The system involves a range of indices that track all eligible companies listed on the Bursa Malaysia Main Board and ACE markets.

This series of indices are used to measure the performance of the major segments of the market. There are a number of different indices that cover different areas of the market.

For example, the FTSE Bursa Malaysia Top 100 Index covers the 100 largest stocks on the market and the FTSE Bursa Malaysia EMAS Industry Indices cover 10 Industries, 19 Supersectors and 39 Sectors.

There are a number of Shariah compliant indices to follow also, which are especially popular due to the culture of this region.

The headline index for Malaysia is the FTSE Bursa Malaysia KLCI which covers the top 30 stocks in the market.

What to look out for when investing in shares

A really great feature of investing in the market is that Bursa Malaysia has a scheme called CBRS. This allows each and every investor access to free research reports of Bursa-listed companies.

This is a great resource for making your equity selections. The market also has a lot of options if you are looking for Shariah compliant investments.

When investing in Malaysian equities you will be buying and selling in Malaysian Ringgit. If you are based overseas, your broker will convert your dollars for you but you need to remember that the rate is not fixed. Most brokers now provide multi-currency accounts.

Having an account set up to trade in multiple currencies will make it simpler for you to monitor the currency changes involved with your investments.

This set up can lead to lower broker fees when it comes to exchanging your money. Monitor the exchange rate when making your investment decisions as it will affect your investment performance.

Keeping track of your equity portfolio

It is a bad idea to put all your money into a single investment as you risk losing all of it if that one company goes under. Spread your investments over a variety of holdings; this is called diversification and will help create a higher return on your portfolio.

This article first appeared in The New Savvy.

The New Savvy is Asia’s leading financial, investment and career platform for women. Our bold vision is to empower 100 million women to achieve financial happiness. We deliver high-quality content through conferences, e-learning platforms, personal finance apps and e-commerce stores.