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Stock Investment in Malaysia
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I’ve come across numerous Malaysian individuals who are clueless about how to start stock investment in Malaysia. This post will serve to address all the daunting queries and quandaries faced by the Malaysian public regarding stock investment in Malaysia.
My main investment goal right now is to build a sufficient amount of passive income to cover my expenses. I plan to do long-term value investing with a focus on growth and dividends.
How Stock Investment Works
In Malaysia, stock investing means buying shares of a public-listed company on Bursa Malaysia. You begin by researching companies you want to invest in, opening a brokerage account, and eventually placing your orders. Profits come from rising stock prices and dividends, while broker fees apply. Capital gains are tax-free for individual investors in Malaysia. In a gist, that is stock investment, we’ll get more in-depth throughout the article.
Bursa Malaysia
Bursa Malaysia operates a fully integrated exchange, offering a complete range of exchange-related services including trading, clearing, settlement and depository services. Familiarize yourself with the trading hours of the local market as listed below.
Monday – Friday (except public holidays)
- Pre-Open – 8.30 am – 9.00 am
- Continuous Trading – 9.00 am – 12.30 pm
- Pre-Open – 2.00 pm – 2.30 pm
- Continuous Trading – 2.30 pm – 4.45 pm
- Pre-Close – 4.45 pm – 4.50 pm
- Trading at Last 4.50 pm – 5.00 pm
- Close – 5.00 pm
Investing Terminologies for Bursa Malaysia
1. Share Lots – How Many Shares is One Lot
When investing in stocks in Malaysia, a minimum of 1 lot is required, and 1 lot is equivalent to 100 shares. So, for example, let’s say you decide to purchase 1 lot of Nestle Malaysia, and the share price is RM70. You will be required to fork out a cool RM7,000 for this minimum transaction. This is the reason why some would call Nestle an ‘expensive stock’. However this, to me is a misleading comment as the only thing that is ‘expensive’ about Nestle in this situation is its minimum investment.
Edit: As of September 2019, Nestle Bhd’s share price has more than doubled to RM145 per share.
2. Limit Up and Limit Down
Limit ups and limit downs are price limit rules that restrict how much a particular stock on the KLCI can go up or down in a day.
For KLCI component stocks trading at RM1 per share and higher, the upper limit price is capped at 30% intraday while the lower limit is capped at -15% intraday. For example, an RM1 stock can go up to, at most RM1.30 in a single day. You can still trade it, but it’s capped at RM1.30 throughout.
For stocks whose prices are below RM1, the upper limit is capped at +30 sen and the lower limit is set at -15 sen.
An overall circuit breaker is also in place for the entire KLCI:
- Level 1 is triggered when the FBM KLCI falls by 10% or more but less than 15% from the previous day’s closing. Trading is halted for an hour or for the rest of the day, depending on the time it’s triggered.
- Level 2 is triggered when the FBM KLCI drops by 15% or more from the previous day’s closing, leading to a trading halt for the remainder of the day.
Circuit breakers and limits exist to curb enthusiasm and/or panic. It’s a precautionary measure put in place so that the market can take a breather and slow down. They are especially useful at preventing a free fall and so far, they’re of use and working.
3. Bid and Ask Price
The bid price is the highest price a buyer is willing to pay for a stock.
The ask price is the lowest price a seller is willing to accept.
The difference between the two is called the bid-ask spread. A smaller spread indicates a more liquid stock, while a larger spread suggests lower liquidity.
4. Market Orders vs. Limit Orders
A market order executes immediately at the current price.
A limit order lets you specify a price at which you are willing to buy or sell.
Example: If a stock is trading at RM2.00 and you place a limit buy order at RM1.90, it will only execute if the stock price drops to RM1.90 or lower.
5. Dividends & Ex-Dividend Date
Dividends are payouts from a company’s profits to its shareholders.
Ex-dividend date: You must own the stock before this date to receive the dividend.
Payment date: The date the dividend is credited to shareholders.
6. IPO (Initial Public Offering) in Malaysia
An IPO is when a private company goes public by offering shares on Bursa Malaysia.
Investors can subscribe to IPOs through their brokerage accounts or via MITI allocations (for Bumiputera investors). IPO shares are often allocated at a fixed price before they start trading publicly.
Opening your Stock Investment Trading Account
CDS Account
CDS stands for Central Depository System, and all CDS accounts are maintained by Bursa Malaysia. As an individual, you have the option to create either a Direct CDS Account or a Nominee CDS Account. I would advise opening a Direct CDS Account as it gives you full visibility and control over your holdings.
The only exception is for brokers like MooMoo and Rakuten Trade, who operate nominee accounts but provide all corporate action services at no extra charge — so you get the convenience without the usual drawbacks.
As for which broker to use, I have compiled a full Comparison of Stock Brokers in Malaysia that breaks down fees, platforms and features. Personally I use MooMoo and Rakuten Trade.
The good news is that opening a CDS and brokerage account in 2026 can be done 100% online in under 30 minutes. No office visits, no paperwork. Just download the app, verify your MyKad via eKYC and you are good to go.
Cash or Margin Account?
Always a cash account. Unless you’re really experienced and confident in your trading abilities, please DO NOT even consider a margin account. A margin account, also known as a collateralized account allows you to borrow money to buy shares. Your broker charges you interest or higher fees for the right to borrow that money and uses your security as collateral.
Using leverage to buy your shares is very very dangerous because of a clause and event known as a Margin Call.
A margin call is a broker’s demand on an investor to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin (based on their own particular formula).
Basically, if your portfolio value falls below a certain amount, your broker will require you to top up until you reach that threshold. If you don’t they’re going to start selling your shares, at a loss. And it is extremely easy for your portfolio to fall below that threshold because the stock market is so volatile in the short term.
In short, go for the cash upfront account.
How much should I start with?
This has changed significantly compared to a few years ago. With modern online brokers like MooMoo and Rakuten Trade offering brokerage fees as low as 0.03% to 0.1% with much lower minimum charges, the barrier to entry is far lower than it used to be.
Here is a rough guide for 2026:
- Minimum comfortable start: RM1,000 – enough to buy 1 lot of most mid-range stocks and keep fees proportionate
- Recommended start: RM3,000 – gives you flexibility to diversify across 2 to 3 stocks
- Ideal start: RM5,000 to RM8,000 – allows meaningful positions while keeping brokerage fees as a small percentage of your trade
The key fees to be aware of:
- Brokerage fee – charged by your broker, typically 0.03% to 0.1% of trade value depending on the broker
- Stamp duty – RM1 for every RM1,000 of contract value, capped at RM200
- Clearing fee – 0.03% of contract value, capped at RM1,000
In total, expect to pay around 0.1% to 0.2% per trade with a modern online broker. That is significantly cheaper than the older full-service brokers. The key is to avoid trading too frequently as fees add up quickly on small amounts.
Check out my Malaysia Stock Brokers Comparison to find the broker with the lowest fees for your needs. I started small as well – the key is consistency and savings.
Dividend Entitlement and Ex-Date
There are four important dates when it comes to receiving dividends:
- Announcement date: This is when the company announces the amount of dividend to be paid as well as its ex-date and other details.
- Ex-dividend date: To be eligible to receive the dividend, you need to hold your shares BEFORE (not on, or after) the ex-date.
- Entitlement date: This is when the company goes through its records to determine shareholders’ eligibility and entitlement to dividends.
- Payment date: Payday! The date you receive your dividends.
As long as you hold the shares past the Ex-dividend date, you will be entitled to receive dividends. Even if you sell them after the ex-date. However, don’t be misled and mistaken that this is an easy way to earn free money. Usually, stock prices drop immediately after ex-dates.
Picking your stocks
A simple method I used when starting out was to look at products and services I used every day. Walk through a grocery store – most of the products on the shelves are owned by a handful of listed companies on Bursa Malaysia. Drive on a highway – Touch n Go and the concessionaires are listed companies. Use a bank – Maybank, Public Bank and CIMB are all on Bursa.
If you are completely new and unsure where to start, begin with Malaysia’s largest and most well-known companies. A good starting point is my list of Top 20 Largest Companies in Malaysia, which covers the biggest names on Bursa by market cap with their latest revenue and profit figures.
For income-focused investors, my Best Dividend Stocks in Malaysia guide covers the top picks by dividend yield across banks, REITs, utilities and consumer stocks.
For REITs specifically – which are my personal favourite for passive income – check out my Complete Guide to REITs in Malaysia.
There are many valuation methods out there – price to earnings ratio, dividend yield, net asset value and more. I urge you to study them and find a few that suit your risk appetite. The most important thing is to invest in what you understand and hold for the long term.
Photo source: philstar.com
Are Capital Gains or Dividends taxable in Malaysia?
Malaysian investors are fortunate – capital gains from stocks are not taxed for individual investors. If you buy a stock at RM2 and sell it at RM5, that RM3 gain is yours to keep, tax-free.
As for dividends, Malaysia practices a single-tier tax system where the company paying dividends has already paid the tax at the corporate level. The dividends you receive as an individual investor are tax-free and do not need to be declared in your personal tax return.
One important exception for 2026 – REITs. Effective YA 2026, distributions from Malaysian REITs are no longer subject to the old flat 10% withholding tax. Instead they are taxed at your personal marginal income tax rate of 0% to 30%. For lower income investors this is actually good news – you could receive REIT distributions completely tax-free. For higher earners above RM100,000 in chargeable income, you will pay more than before. Read more about this in my Complete Guide to REITs in Malaysia.
For regular Bursa Malaysia stocks however, dividends remain tax-free as before. A good practice is to keep your dividend vouchers for record-keeping purposes.
Are stock investment losses tax deductible in Malaysia?
The short answer is No. For individual investors in Malaysia, stock investment losses are not tax deductible because capital gains on stocks are not taxed. However, if you trade stocks as part of a business, those losses might be considered business expenses and could be deductible. Always consult a tax professional for advice tailored to your situation.
End.
My investment philosophy has always been long term. Short-term trading will more often than not hurt you in the end. Buy good companies, hold them, and let the dividends compound over time.
I update my dividend income from Malaysia every month and you can see an overview of my entire portfolio at The Freedom Fund. As of 2026, I am on track to collect over RM36,000 in dividends this year – the result of years of consistent saving and investing.
It has been an incredible journey and I hope this guide has helped make stock investment in Malaysia feel a little less daunting. Please leave a comment below if you have any questions – I read and reply to all of them.
Do you currently have any stock investments in Malaysia?
For the next article of the Investing Series, check out article 002 – The Complete Guide to REITs in Malaysia.
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