The norms for a relisting of the delisted company is same as is for the new listing ie. raise of equity capital to expand/grow business, provides an exit mechanism for shareholders (cash-in quickly), enhance company reputation, free media attention, easier equity fundings through corporate action, etc...
Wednesday, August 29, 2012
Why Relist A Delisted Company?
Saturday, May 19, 2012
How is Initial Public Offering (IPO) shares being ballotted?
All applications received are sorted into Bumiputera or
non-Bumiputera categories (except for some ACE Market IPOs which are not
segregated) and also in terms of denomination of shares applied.
Electronic Share Applications (ESA) and Internet Share Applications
(ISA) applications furnished by all participating ESA banks and internet
participating financial institutions will also be electronically sorted into
the required categories.
Counting of applications is thereafter done.
The subscription results are presented to the Directors of the IPO Issuer for information purposes as well as to determine the basis of allotment of available shares via balloting in the event of oversubscription.
In determining the number of successful applications to be balloted in each category, the Directors will give due consideration to fair distribution to a reasonable number of applicants to ensure a broadened shareholding base which will establish an adequate market in the trading of the shares to be listed. The minimum share spread required under the Listing Requirements of the Bursa Malaysia Securities Berhad will also be observed.
Having decided on the basis of allotment, balloting of successful applicants in each category of shares will be carried out. Using 2 sets of passwords, balloting is electronically done with the 7 digit random numbers assigned to each share application randomly picked by computer. Reserve applications representing about 10% of successful applications will also be balloted. The balloting is conducted in the presence of the Directors of the IPO Issuer and external balloting auditors, the only party with access to the balloting program.
The Securities Commission, Bursa Malaysia and the media are informed of the subscription and balloting results.
Counting of applications is thereafter done.
The subscription results are presented to the Directors of the IPO Issuer for information purposes as well as to determine the basis of allotment of available shares via balloting in the event of oversubscription.
In determining the number of successful applications to be balloted in each category, the Directors will give due consideration to fair distribution to a reasonable number of applicants to ensure a broadened shareholding base which will establish an adequate market in the trading of the shares to be listed. The minimum share spread required under the Listing Requirements of the Bursa Malaysia Securities Berhad will also be observed.
Having decided on the basis of allotment, balloting of successful applicants in each category of shares will be carried out. Using 2 sets of passwords, balloting is electronically done with the 7 digit random numbers assigned to each share application randomly picked by computer. Reserve applications representing about 10% of successful applications will also be balloted. The balloting is conducted in the presence of the Directors of the IPO Issuer and external balloting auditors, the only party with access to the balloting program.
The Securities Commission, Bursa Malaysia and the media are informed of the subscription and balloting results.
Wednesday, March 14, 2012
Disadvantages of Leasehold Property
Property can be divided into two sections. A freehold or leasehold property. A freehold property is a property where you will have the rights on the property with any time frame or duration. For leasehold property, one will have a lease duration usually 30, 60 or 99 years.
Below are the disadvantages of purchasing a leasehold property :-
1. Less chance in appreciation in value.
2. Harder to sell. Even harder to sell if the lease is nearing the end.
3. Need to pay premium. To extend the period of the lease one needs to pay premium. The longer the extension of the lease, the more premium one needs to pay.
4. Harder to get loan. To purchase leasehold property, banks are more strict in giving out loans. Property which has shorter lease period might not even get a bank loan.
5. Limitations. The leasehold agreement places limitations on what can be done with the property. Eg. to knock down an old development and build a new one would require a new leasehold agreement. There are associated costs with each of those arrangements.
Below are the disadvantages of purchasing a leasehold property :-
1. Less chance in appreciation in value.
2. Harder to sell. Even harder to sell if the lease is nearing the end.
3. Need to pay premium. To extend the period of the lease one needs to pay premium. The longer the extension of the lease, the more premium one needs to pay.
4. Harder to get loan. To purchase leasehold property, banks are more strict in giving out loans. Property which has shorter lease period might not even get a bank loan.
5. Limitations. The leasehold agreement places limitations on what can be done with the property. Eg. to knock down an old development and build a new one would require a new leasehold agreement. There are associated costs with each of those arrangements.
Tuesday, March 13, 2012
What Do You Know About Bankruptcy?
A bankrupt is someone who has officially declared that he cannot pay what he owes. In Malaysia, the minimum amount outstanding debt amount to initiate bankruptcy is RM30,000.
How Does a Person Become a Bankrupt?
1. Taking Up a Loan - There are various loans available to cater for different needs and wants. These loans can be personal loans, study or education loans, housing loans and even buying a car under a hire-purchase scheme.
2. Acting As a Guarantor - A guarantor can be a social guarantor or a corporate guarantor. A person who stood as a guarantor for loans like education, house, car hire purchase, scholarship and also third-party loans is known as a social guarantor. A corporate guarantor is a person who stood for loans relating to business loans, for example in a business partnership. A guarantor is also liable to face bankruptcy when summoned by the creditors. The creditors will go after the borrower first and if that fails to recover the amount owed, they will go after the guarantor to settle the debts.
3. Defaulting On Credit Card Payment - The inability to pay up the amount owed in the credit card account is also one reason to go bankrupt.
What Does It Mean To Be a Bankrupt?
1. He had to give up all his belongings and assets.
2. He is not allowed to open a bank account without the approval of the Director General of Insolvency (DGI).
3. He is not allowed to travel outside from the country without first getting approval from the DGI or the court. The DGI will hold his passport.
4. He is not allowed to do any business nor become a company director nor even be part of the company's management.
5. He has to sacrifice a certain percentage of his monthly income to the DGI to repay his debts.
How Does a Person Become a Bankrupt?
1. Taking Up a Loan - There are various loans available to cater for different needs and wants. These loans can be personal loans, study or education loans, housing loans and even buying a car under a hire-purchase scheme.
2. Acting As a Guarantor - A guarantor can be a social guarantor or a corporate guarantor. A person who stood as a guarantor for loans like education, house, car hire purchase, scholarship and also third-party loans is known as a social guarantor. A corporate guarantor is a person who stood for loans relating to business loans, for example in a business partnership. A guarantor is also liable to face bankruptcy when summoned by the creditors. The creditors will go after the borrower first and if that fails to recover the amount owed, they will go after the guarantor to settle the debts.
3. Defaulting On Credit Card Payment - The inability to pay up the amount owed in the credit card account is also one reason to go bankrupt.
What Does It Mean To Be a Bankrupt?
1. He had to give up all his belongings and assets.
2. He is not allowed to open a bank account without the approval of the Director General of Insolvency (DGI).
3. He is not allowed to travel outside from the country without first getting approval from the DGI or the court. The DGI will hold his passport.
4. He is not allowed to do any business nor become a company director nor even be part of the company's management.
5. He has to sacrifice a certain percentage of his monthly income to the DGI to repay his debts.
Monday, March 5, 2012
What Happen If There Is No Will?
If there is NO WILL in Malaysia, the estate will be distributed in accordance with the Distribution Act 1958 (Amended 1997) as follow:-
1. Spouse - 1/4
2. Parent - 1/4 (siblings if parent also die without will during the distribution process)
3. Children - 1/2
In the case when and intestate dies without leaving a surviving spouse, child or parent, the following person(s) are entitled to the estate in accordance to priority :-
1. brothers and sisters
2. grandparents
3. uncles and aunts
4. great grandparents
5. great uncles and aunts
6. government
Under the law, there is no provision for other groups of people (eg. partner, step children, illegitimate children, aged relative, etc). They might fall into financial difficulties without your support.
The legal process could take years. Assets could have frozen and shrunk in value when Letter of Administration is obtained.
Please consider writing a Will today for your loves one. Be sure they get what you want them to get when you are not around.
(Note: This Act does not apply to Muslims)
1. Spouse - 1/4
2. Parent - 1/4 (siblings if parent also die without will during the distribution process)
3. Children - 1/2
In the case when and intestate dies without leaving a surviving spouse, child or parent, the following person(s) are entitled to the estate in accordance to priority :-
1. brothers and sisters
2. grandparents
3. uncles and aunts
4. great grandparents
5. great uncles and aunts
6. government
Under the law, there is no provision for other groups of people (eg. partner, step children, illegitimate children, aged relative, etc). They might fall into financial difficulties without your support.
The legal process could take years. Assets could have frozen and shrunk in value when Letter of Administration is obtained.
Please consider writing a Will today for your loves one. Be sure they get what you want them to get when you are not around.
(Note: This Act does not apply to Muslims)
Saturday, March 3, 2012
Real Property Gain Tax (RPGT) & Exemption
Under Budget 2012, a new structure of RPGT was introduced:-
- Properties held and disposed within 2 years, RPGT = 10%
- Properties held and disposed after 2 years & up to 5 years , RPGT = 5%
(Note: The RPGT of 5% flat for disposal of real properties or shares un real property companies within 5 years is no longer applicable.)
However, RPGT is exempted or no RPGT is levied even though they are disposed within the first 5 years from the date of purchase:-
- Disposal of a residential property once in a lifetime by an individual who is a Malaysian citizen or a permanent resident if he/she elects in writing for the exemption to apply to that private residence.
- Transfer as gifts between parent and child, husband and wife, grandparent and grandchild which are deemed to be "No Gain No Loss" (transfer between sibling/brothers or sisters is not applicable); and
- Exemption of RM10,000 or 10% of the chargeable gain, whichever is greater, for each disposal of a property by an individual. Chargeable gain is generally meaning sale proceeds less purchase cost.
- Transfers between companies that bring greater efficiency or for purpose of reorganization/restructuring.
- Transactions in which the disposal price is deemed equal to acquisition price (i.e. “No Gain No Loss" transactions)
- Properties held and disposed within 2 years, RPGT = 10%
- Properties held and disposed after 2 years & up to 5 years , RPGT = 5%
(Note: The RPGT of 5% flat for disposal of real properties or shares un real property companies within 5 years is no longer applicable.)
However, RPGT is exempted or no RPGT is levied even though they are disposed within the first 5 years from the date of purchase:-
- Disposal of a residential property once in a lifetime by an individual who is a Malaysian citizen or a permanent resident if he/she elects in writing for the exemption to apply to that private residence.
- Transfer as gifts between parent and child, husband and wife, grandparent and grandchild which are deemed to be "No Gain No Loss" (transfer between sibling/brothers or sisters is not applicable); and
- Exemption of RM10,000 or 10% of the chargeable gain, whichever is greater, for each disposal of a property by an individual. Chargeable gain is generally meaning sale proceeds less purchase cost.
- Transfers between companies that bring greater efficiency or for purpose of reorganization/restructuring.
- Transactions in which the disposal price is deemed equal to acquisition price (i.e. “No Gain No Loss" transactions)
Friday, March 2, 2012
Fisherman & Businessman Story
There was once a businessman who was sitting by the beach in a small village. As he sat, he saw a fisherman rowing a small boat towards the shore having caught quite few big fish.
The businessman was impressed and asked the fisherman, “How long does it take you to catch so many fish?” The fisherman replied, “Oh, just a short while.” “Then why don’t you stay longer at sea and catch even more?” The businessman was astonished. “This is enough to feed my whole family,” the fisherman said.
The businessman then asked, “So, what do you do for the rest of the day?” The fisherman replied, “Well, I usually wake up early in the morning, go out to sea and catch a few fish, then go back and play with my kids. In the afternoon, I take a nap with my wife, and evening comes, I join my buddies in the village for a drink — we play guitar, sing and dance throughout the night.”
The businessman offered a suggestion to the fisherman. “I am a PhD in business management. I could help you to become a more successful person. From now on, you should spend more time at sea and try to catch as many fish as possible. When you have saved enough money, you could buy a bigger boat and catch even more fish. Soon you will be able to afford to buy more boats, set up your own company, your own production plant for canned food and distribution network. By then, you will have moved out of this village and to Sao Paulo, where you can set up HQ to manage your other branches.”
The fisherman continues, “And after that?” The businessman laughs heartily, “After that, you can live like a king in your own house, and when the time is right, you can go public and float your shares in the Stock Exchange, and you will be rich.”
The fisherman asks, “And after that?” The businessman says, “After that, you can finally retire, you can move to a house by the fishing village, wake up early in the morning, catch a few fish, then return home to play with kids, have a nice afternoon nap with your wife, and when evening comes, you can join your buddies for a drink, play the guitar, sing and dance throughout the night!”
The fisherman was puzzled, “Isn’t that what I am doing now?”
----------------------------------------------------------------------
We live in a world in which being successful is everything. Success is measured by power, popularity, control, achievement, wealth and winning. Having more and being more is success but how true it is? Let's spend some time to think about it. It's your life anyway. I hope you will find what you want....
The businessman was impressed and asked the fisherman, “How long does it take you to catch so many fish?” The fisherman replied, “Oh, just a short while.” “Then why don’t you stay longer at sea and catch even more?” The businessman was astonished. “This is enough to feed my whole family,” the fisherman said.
The businessman then asked, “So, what do you do for the rest of the day?” The fisherman replied, “Well, I usually wake up early in the morning, go out to sea and catch a few fish, then go back and play with my kids. In the afternoon, I take a nap with my wife, and evening comes, I join my buddies in the village for a drink — we play guitar, sing and dance throughout the night.”
The businessman offered a suggestion to the fisherman. “I am a PhD in business management. I could help you to become a more successful person. From now on, you should spend more time at sea and try to catch as many fish as possible. When you have saved enough money, you could buy a bigger boat and catch even more fish. Soon you will be able to afford to buy more boats, set up your own company, your own production plant for canned food and distribution network. By then, you will have moved out of this village and to Sao Paulo, where you can set up HQ to manage your other branches.”
The fisherman continues, “And after that?” The businessman laughs heartily, “After that, you can live like a king in your own house, and when the time is right, you can go public and float your shares in the Stock Exchange, and you will be rich.”
The fisherman asks, “And after that?” The businessman says, “After that, you can finally retire, you can move to a house by the fishing village, wake up early in the morning, catch a few fish, then return home to play with kids, have a nice afternoon nap with your wife, and when evening comes, you can join your buddies for a drink, play the guitar, sing and dance throughout the night!”
The fisherman was puzzled, “Isn’t that what I am doing now?”
----------------------------------------------------------------------
We live in a world in which being successful is everything. Success is measured by power, popularity, control, achievement, wealth and winning. Having more and being more is success but how true it is? Let's spend some time to think about it. It's your life anyway. I hope you will find what you want....
Becoming A Guarantor
Financial institutions may require guarantees from prospective borrowers to enhance the borrower’s credit standing and enable them to obtain financing.
If someone names you as a guarantor, you are legally bound to pay back the loan or balance there of if the borrower cannot or will not pay.
What must you remember as guarantor?
- Read and understand the nature of the guarantee. Most people willingly sign on as a guarantor without understanding the impacts on them.
- Check and ensure the guarantee is subject to the laws of Malaysia.
- Be wary about giving a copy of your identification to anyone other than the financial institution or your lawyers.
- Do not sign a blank or partially filled document, or if you do not have a financial, business or moral interest in the transaction.
- Do not become a guarantor to someone whom you have doubts about their ability or integrity.
- Ensure that you are aware of your liabilities in the event that variations are made to the terms and conditions of the loan.
How To Make A Bank's Complaint?
A bankrupt is someone who has officially declared that he cannot pay what he owes. In Malaysia, the minimum amount outstanding debt amount to initiate bankruptcy is RM30,000.
How Does a Person Become a Bankrupt?
1. Taking Up a Loan - There are various loans available to cater for different needs and wants. These loans can be personal loans, study or education loans, housing loans and even buying a car under a hire-purchase scheme.
2. Acting As a Guarantor - A guarantor can be a social guarantor or a corporate guarantor. A person who stood as a guarantor for loans like education, house, car hire purchase, scholarship and also third-party loans is known as a social guarantor. A corporate guarantor is a person who stood for loans relating to business loans, for example in a business partnership. A guarantor is also liable to face bankruptcy when summoned by the creditors. The creditors will go after the borrower first and if that fails to recover the amount owed, they will go after the guarantor to settle the debts.
3. Defaulting On Credit Card Payment - The inability to pay up the amount owed in the credit card account is also one reason to go bankrupt.
What Does It Mean To Be a Bankrupt?
1. He had to give up all his belongings and assets.
2. He is not allowed to open a bank account without the approval of the Director General of Insolvency (DGI).
3. He is not allowed to travel outside from the country without first getting approval from the DGI or the court. The DGI will hold his passport.
4. He is not allowed to do any business nor become a company director nor even be part of the company's management.
5. He has to sacrifice a certain percentage of his monthly income to the DGI to repay his debts.
How Does a Person Become a Bankrupt?
1. Taking Up a Loan - There are various loans available to cater for different needs and wants. These loans can be personal loans, study or education loans, housing loans and even buying a car under a hire-purchase scheme.
2. Acting As a Guarantor - A guarantor can be a social guarantor or a corporate guarantor. A person who stood as a guarantor for loans like education, house, car hire purchase, scholarship and also third-party loans is known as a social guarantor. A corporate guarantor is a person who stood for loans relating to business loans, for example in a business partnership. A guarantor is also liable to face bankruptcy when summoned by the creditors. The creditors will go after the borrower first and if that fails to recover the amount owed, they will go after the guarantor to settle the debts.
3. Defaulting On Credit Card Payment - The inability to pay up the amount owed in the credit card account is also one reason to go bankrupt.
What Does It Mean To Be a Bankrupt?
1. He had to give up all his belongings and assets.
2. He is not allowed to open a bank account without the approval of the Director General of Insolvency (DGI).
3. He is not allowed to travel outside from the country without first getting approval from the DGI or the court. The DGI will hold his passport.
4. He is not allowed to do any business nor become a company director nor even be part of the company's management.
5. He has to sacrifice a certain percentage of his monthly income to the DGI to repay his debts.
e-Share Payment
e-Share Payment is an electronic settlement facility provided by all stockbrokers for the purpose of :-
- payment of share sales proceeds by the stockbroker directly into your bank account
- providing an option for you to initiate payment via e‐channels (e.g. internet banking, mobile banking, ATM, etc) or to authorize the banks where you maintain your bank account to allow the stockbroker to debit your bank account (auto debit) for the purpose of share purchases.
e-Share Payment eliminates the need to bank-in the cheques received from the sale of shares and also enable you to make online payments anytime from the comfort of your home.
Check with your broker (not the bank) if you are interested. Not applicable trading account opened with the bank.
Sunday, February 26, 2012
Misconception About Penny Stock Prices
Many people like to purchase only low priced/penny stocks because they offer higher potential gains. A common phase we hear is "I like to buy 10-20 cents stocks because I can double easily and I will make a 100% profit".
Hey, "stocks are priced low for a reason, just as stocks priced high are there for a reason".
Like anything in life, quality is never offered at a discount. Eg. When you are in the market for a car, you don't expect to purchase a Mercedes for the price of a second-hand Proton Saga.
Stocks are valued at their current market value or perceived value under the current situations. A 10 cent stock is trading at this level because it is only worth this much in investor's eyes. A stock priced at $10 or $20 is trading at these levels because of a quality that the lower priced stock does not have. Institutions, such as mutual funds, will not purchase a stock at 10 cent based on strict internal rules and fund guidelines. Stocks move based on vast amounts of support from institutions that have the buying power to propel prices 100%, 200% or more in less than 12 months.
A quick study of stock market history will prove that the majority of stocks priced at $2 or less will be de-listed or bankrupt before they ever give an investor a triple digit return.
High quality stocks are typically representative of high quality companies that usually have innovative products or services that are increasing revenues and earnings thus peaking institutional interest. We have seen many such stocks double or triple during the past 5 years.
Always buy the stock that presents the highest probability of success based on both fundamental and technical analysis. The price should never matter nor should the lot size. A 25% gain will always be the same whether you buy a $2 stock with 5000 shares or a $100 stock with 100 shares.
Hey, "stocks are priced low for a reason, just as stocks priced high are there for a reason".
Like anything in life, quality is never offered at a discount. Eg. When you are in the market for a car, you don't expect to purchase a Mercedes for the price of a second-hand Proton Saga.
Stocks are valued at their current market value or perceived value under the current situations. A 10 cent stock is trading at this level because it is only worth this much in investor's eyes. A stock priced at $10 or $20 is trading at these levels because of a quality that the lower priced stock does not have. Institutions, such as mutual funds, will not purchase a stock at 10 cent based on strict internal rules and fund guidelines. Stocks move based on vast amounts of support from institutions that have the buying power to propel prices 100%, 200% or more in less than 12 months.
A quick study of stock market history will prove that the majority of stocks priced at $2 or less will be de-listed or bankrupt before they ever give an investor a triple digit return.
High quality stocks are typically representative of high quality companies that usually have innovative products or services that are increasing revenues and earnings thus peaking institutional interest. We have seen many such stocks double or triple during the past 5 years.
Always buy the stock that presents the highest probability of success based on both fundamental and technical analysis. The price should never matter nor should the lot size. A 25% gain will always be the same whether you buy a $2 stock with 5000 shares or a $100 stock with 100 shares.
Is Income from Shares Investment Taxable?
After having received money (cash dividend) from your shares investment, have you considered whether the receipts are taxable?
In general, people are under the impression that dividend income is not required to be reported in the tax return. This is only true provided the dividend income is tax exempt as in the case where the dividend that is received is either a single tier dividend or is paid out of the exempt profits of the dividend-paying company.
In the case where you received dividends where income tax has been deducted at source, such dividend income is taxable and consequently has to be declared in your income tax return.
Depending on your level of taxable income, you may actually obtain a tax refund from the Inland Revenue Board (IRB) if your tax bracket is at 24% or below.
Generally, the tax deducted by the company on the taxable dividend is at the rate of 25%. On the other hand, if your tax bracket is at 27%, then you are required to pay the 2% differential to the IRB.
In order to determine whether your dividend income is taxable or otherwise, you can look at the dividend vouchers. However, one common mistake in the reporting of taxable dividend income is where the actual amount received is declared as opposed to the gross dividend income, as stated in the dividend voucher.
In general, people are under the impression that dividend income is not required to be reported in the tax return. This is only true provided the dividend income is tax exempt as in the case where the dividend that is received is either a single tier dividend or is paid out of the exempt profits of the dividend-paying company.
In the case where you received dividends where income tax has been deducted at source, such dividend income is taxable and consequently has to be declared in your income tax return.
Depending on your level of taxable income, you may actually obtain a tax refund from the Inland Revenue Board (IRB) if your tax bracket is at 24% or below.
Generally, the tax deducted by the company on the taxable dividend is at the rate of 25%. On the other hand, if your tax bracket is at 27%, then you are required to pay the 2% differential to the IRB.
In order to determine whether your dividend income is taxable or otherwise, you can look at the dividend vouchers. However, one common mistake in the reporting of taxable dividend income is where the actual amount received is declared as opposed to the gross dividend income, as stated in the dividend voucher.
Saturday, February 25, 2012
Regulated Short Selling (RSS) on Bursa Malaysia
Basically, short selling means that investors sell a share without first having it. Short selling is a technique used by investors to profit from the falling price of an overpriced market.
In Bursa Malaysia, short selling is regulated under Regulated Short Selling (RSS) and Securities Borrowing and Lending (SBL) guidelines, which introduced to the market on 3rd January 2007. Prior to 2006, short selling was banned for about 8 years.
RSS means that investors sell a share without first having it, but they have to borrow it from the Central Lending Agency (CLA). CLA is an agency managed by Bursa Clearing where all lending and borrowing are taking place. Investors don’t deal directly with the CLA, but they have to go through the approved Participating Organisation (PO) or investment bank.
For those who have excess shares, you may lend it to the CLA and earn some fees.
1. How to participate in RSS?
Investor who wishes to participate in RSS must open a designated RSS trading account with a PO. All short selling transactions are to be executed through a RSS Account.
Prior to executing RSS, investors must first borrow the stocks from the CLA through the approved PO. Investors have to pay a fee and placing sufficient collaterals for borrowing.
Upon successfully borrowed the required stock, RSS will be executed by dealers at PO after receiving instruction from the investors. The order price must be higher than the last traded price of the relevant stocks. This is known as the ‘up-tick rule‘.
2. Which stocks are approved for RSS
Please refer to Bursa's website.
3. Suspension of RSS
Total short position of an approved stocks is limited to 10% of the total number of the shares. When the limit reach, RSS activities on that stocks will be suspended for 4 market days.
4. More informations
Please refer to Bursa's website.
In Bursa Malaysia, short selling is regulated under Regulated Short Selling (RSS) and Securities Borrowing and Lending (SBL) guidelines, which introduced to the market on 3rd January 2007. Prior to 2006, short selling was banned for about 8 years.
RSS means that investors sell a share without first having it, but they have to borrow it from the Central Lending Agency (CLA). CLA is an agency managed by Bursa Clearing where all lending and borrowing are taking place. Investors don’t deal directly with the CLA, but they have to go through the approved Participating Organisation (PO) or investment bank.
For those who have excess shares, you may lend it to the CLA and earn some fees.
1. How to participate in RSS?
Investor who wishes to participate in RSS must open a designated RSS trading account with a PO. All short selling transactions are to be executed through a RSS Account.
Prior to executing RSS, investors must first borrow the stocks from the CLA through the approved PO. Investors have to pay a fee and placing sufficient collaterals for borrowing.
Upon successfully borrowed the required stock, RSS will be executed by dealers at PO after receiving instruction from the investors. The order price must be higher than the last traded price of the relevant stocks. This is known as the ‘up-tick rule‘.
2. Which stocks are approved for RSS
Please refer to Bursa's website.
3. Suspension of RSS
Total short position of an approved stocks is limited to 10% of the total number of the shares. When the limit reach, RSS activities on that stocks will be suspended for 4 market days.
4. More informations
Please refer to Bursa's website.
Direct CDS vs Nominee CDS Account
When opening a trading account with a Broker (Participating Organization) or a Bank, a CDS account will be opened at the same time. Normally, Brokers can offer Direct CDS or Nominee CDS Account but Banks can only offers Nominee CDS Account.
CDS stand for “Central Depository System” and it maintain by Bursa Malaysia Depository Sdn Bhd. Previously it was known as Malaysian Central Depository (“MCD”).
Each CDS account have its own advantage and disadvantage. Below are the different between the two:-
Direct CDS Account
Account Name - Under shareholder name (eg Mr Lee)
IPO application - Eligible
Paperwork on corporate exercise - Handle by shareholder
Dividend - Send to shareholder or eDividend
Attending AGM - Eligible
Annual Report - Mail to shareholder
Share transfer - To own or relative account
Nominee CDS Account
Account Name - Under Broker/Bank Name (eg CIMB Nominee Tempatan for/Pledged Securities Account for Mr Lee)
IPO application - Not eligible
Paperwork on corporate action - Handled by Broker/Bank
Dividend - Credited to trust/share account
Attending AGM - Not Eligible (but can get Broker/Bank to appoint as proxy)
Annual Report - Have to request from Broker/Bank
Share transfer - Only to own account
By looking at the above, it is clear that Direct CDS account have more advantage when compare to Nominee CDS account. The only advantage of Nominee CDS account is shareholder do not need to worry about paperwork on corporate exercise.
CDS stand for “Central Depository System” and it maintain by Bursa Malaysia Depository Sdn Bhd. Previously it was known as Malaysian Central Depository (“MCD”).
Each CDS account have its own advantage and disadvantage. Below are the different between the two:-
Direct CDS Account
Account Name - Under shareholder name (eg Mr Lee)
IPO application - Eligible
Paperwork on corporate exercise - Handle by shareholder
Dividend - Send to shareholder or eDividend
Attending AGM - Eligible
Annual Report - Mail to shareholder
Share transfer - To own or relative account
Nominee CDS Account
Account Name - Under Broker/Bank Name (eg CIMB Nominee Tempatan for/Pledged Securities Account for Mr Lee)
IPO application - Not eligible
Paperwork on corporate action - Handled by Broker/Bank
Dividend - Credited to trust/share account
Attending AGM - Not Eligible (but can get Broker/Bank to appoint as proxy)
Annual Report - Have to request from Broker/Bank
Share transfer - Only to own account
By looking at the above, it is clear that Direct CDS account have more advantage when compare to Nominee CDS account. The only advantage of Nominee CDS account is shareholder do not need to worry about paperwork on corporate exercise.
Thursday, February 23, 2012
How to Calculate Gearing, Premium & Cash Settlement for Call Warrants?
Call Warrant is an alternative investment that investor can invest in Bursa Malaysia. It can be traded through remisiers, banks’ dealers or via online trading, which is similar to trading shares.
The advantage of call warrants is that, it has unlimited upside (gain) similar to buying the underlying asset, but the loss is limited to the amount initially invested in the call warrant.
In order to make trading decision, normally investors look at gearing, premium, cash settlement & expiry date.
Below is the formula to how calculate call warrant gearing, premium and cash settlement:-
Gearing = Underlying Price/(Warrant Price x Exercise Ratio)
Premium = {[(Warrant price x Exercise Ratio) + Exercise Price] – Underlying Price)}/Underlying Price
Cash Settlement = No of Call Warrants x (1/ Exercise Ratio) x (Closing Price – Exercise Price)
The advantage of call warrants is that, it has unlimited upside (gain) similar to buying the underlying asset, but the loss is limited to the amount initially invested in the call warrant.
In order to make trading decision, normally investors look at gearing, premium, cash settlement & expiry date.
Below is the formula to how calculate call warrant gearing, premium and cash settlement:-
Gearing = Underlying Price/(Warrant Price x Exercise Ratio)
Premium = {[(Warrant price x Exercise Ratio) + Exercise Price] – Underlying Price)}/Underlying Price
Cash Settlement = No of Call Warrants x (1/ Exercise Ratio) x (Closing Price – Exercise Price)
Wednesday, February 22, 2012
Gold Investment in Malaysia
Gold is the best possible hedge against inflation? So where to go for gold investment in Malaysia? Basically, there are few local banks such as Maybank and Public Bank are offering gold investment using passbook savings account concept.
It means a passbook will be given to the gold investors and every purchase or sale order will be recorded in the passbook. It is just functions exactly same like your conventional passbook savings account. Every transaction of either bank in or withdrawal of your money from the savings account will be recorded in the passbook.
There are however, not much of different between the banks except some offers better spread and/or freebies.
Hey, do your homework before investing...
It means a passbook will be given to the gold investors and every purchase or sale order will be recorded in the passbook. It is just functions exactly same like your conventional passbook savings account. Every transaction of either bank in or withdrawal of your money from the savings account will be recorded in the passbook.
There are however, not much of different between the banks except some offers better spread and/or freebies.
Hey, do your homework before investing...
Price Stabilizing Manager in IPO
Under the Capital Market and Services (Price Stabilizing Mechanism) Regulations 2008, an Initial Public Offering (IPO) issuer may appoint a stabilizing manager, who may undertake stabilizing action in an attempt to prevent or minimize the reduction in the stock’s price.
The stabilizing manager will normally, buy back the shares at the offer price if the market price of the share drops below the offering price to support the IPO’s stock price from the first 30 days of the trading debut. The shares will then, return back to the issuer.
If you think that it is quite safe to buy into IPOs that have price stabilizing managers, you may be wrong as:
- the stock’s price is not freely determined by market forces and may imply a certain form of “price manipulation”
- the post-IPO price may not reflect the true value of a company
- you will not know how long the manager will continue to support the share price and what will happen to the stock’s price once the manager stops supporting the price of the stock
Notes: Please understand that not all of newly listed companies have price stabilizing managers. Most of the time, only big IPO issues appoint stabilizing manager.
The stabilizing manager will normally, buy back the shares at the offer price if the market price of the share drops below the offering price to support the IPO’s stock price from the first 30 days of the trading debut. The shares will then, return back to the issuer.
If you think that it is quite safe to buy into IPOs that have price stabilizing managers, you may be wrong as:
- the stock’s price is not freely determined by market forces and may imply a certain form of “price manipulation”
- the post-IPO price may not reflect the true value of a company
- you will not know how long the manager will continue to support the share price and what will happen to the stock’s price once the manager stops supporting the price of the stock
Notes: Please understand that not all of newly listed companies have price stabilizing managers. Most of the time, only big IPO issues appoint stabilizing manager.
PN17 stock? Should you sell or buy?
PN17 stands for Practice Note 17/2005 and is issued by Bursa Malaysia. In general, PN17 companies normally have some financial difficulties.
A rational investor will look for companies with good business fundamentals to invest in and we believe that most investors know which companies have good fundamentals.
Don’t tend to listen to market rumours and buy into companies with poor fundamentals or are speculative in nature with hope that the stock prices will recover. Cut the losses and never average down the purchase prices on these companies.
A rational investor will look for companies with good business fundamentals to invest in and we believe that most investors know which companies have good fundamentals.
Don’t tend to listen to market rumours and buy into companies with poor fundamentals or are speculative in nature with hope that the stock prices will recover. Cut the losses and never average down the purchase prices on these companies.
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