Thursday, January 6, 2011

Why trade Malaysian Stocks?

Notice I say trading market but not market trading? Despite the mess and excruciating process we need to get through in setting up an account in a foreign country, many active traders still prefers the "gold rains"; from a Malay quote saying "Hujan Emas di Negara orang lain, hujan batu di Negara sendiri, baik di Negara sendiri. It's not the gold that everyone is after. Why trade stocks that we've never heard off? Why not local company which we know about what they do, how much is their worth and products of which we're buying everyday? There are several reasons;

  1. Many governments apart from our own are having less restriction in their stock market hence it is more liquid. More "opportunities" and faster movements.
  2. Paper trade is available elsewhere but not Malaysia.
  3. Brokerage fee is damn cheap if we trade online. It is also damn cheap here but nobody is shouting about it so, it's unheard.
  4. Less instruments or worse, less counters to trade.
  5. Malaysian traders are more conservatives and some even sees technical analysis as bull.
  6. Trading in currency superior than the ringgit is like having leverage. Currently there is no leverage in Malaysian stocks.
  7. Overseas trading allows shorting before buy. It's prohibited in Malaysia.
  8. Forex and Gold trading is prohibited in Malaysia. Common, hottest market but not allowed over here? Opportunity for more tax la. Do away with GST, legalize forex and tax heavily.
  9. Educational courses are limited or expensive. There are limited local softwares to aid our trade.
  10. Many parents do not encourage their young ones to trade. Too risky they say.

So these are only few which I could think of. Do the math, if there are 10% of the total M'sian population trading (about 2.6mil), and each of them trade about RM10 000 monthly (which awfully little), and 10% of them prefers to trade at foreign country, that's about RM2.6 billion outside Malaysia which is supposed to be in the KLSE. As of today total trade in the KLSE is RM3,141,797,088, let's imagine what RM2 600 000 000 per month can offer to the local market. Which that amount of money, companies will have extra funds to invest, which means more job, better products, advancement of technology, more tax for the government, more schools, more hospital so forth and so on. Of course the figure is only hypothetical.

Come back to the topic, why trade Malaysian stocks?

  1. Because we know them.

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