Public Listed Companies in Malaysia

A business running in Malaysia comes in various categories. This can be seen via the suffix that come after its company name. A public listed company is one which usually has a BHD which is short for Berhad. This is the BM term for limited. When a company has a BHD at the end of the title, it indicates that the business is a public limited company. You will notice that most companies (or businesses) use Sdn Bhd which means Sendirian Berhad which indicates that they are a private limited business which means they do not have public shares.

Blue Chip Companies

The usual rule-of-thumb where investments in stocks are concerned is to buy blue chip shares if possible as they are supposedly the most stable. This reputation is the same in every market where the stocks are supposedly able to withstand market pressure and economic downturns. So what are they really? Blue chip is a term used in the poker game where it is the highest value among all the chips. In most cases, blue chip stocks are from companies that are well recognized with products and services that people mostly know. This would usually be the common names and brands. In countries like the US, blue chip companies would be like:

  1. Microsoft
  2. Citibank
  3. Exxon Mobil
  4. Coca-Cola

You will notice that in Malaysia meanwhile, some of the same names are blue chip companies while other top Malaysian brands would be in this category as well.

  1. Citibank
  2. Exxon Mobil
  3. Petronas
  4. Malaysia Airlines
  5. Genting Berhad
  6. Air Asia

The influence of blue chip stocks

What makes blue chip stocks so influential is that the collective performance of these counters will contribute to the market index of the stock exchange. In Malaysia, this is represented by the FBM-KLCI. That will give you an indication of the performance of the exchange of the given day via an index form. As such, it is natural that blue chip stocks are very expensive which means it is not for every investor.

Markets in Bursa Malaysia

Bursa Malaysia offers 3 markets for companies to be listed. This includes:

  1. Main Market – The most prominent and primary market where most (if not all) companies want to be listed in. Blue chip stocks are all in this market
  2. ACE Market – Industry-specific companies. This includes technology and biotechnology among others. It is like an extension of the former MESDAQ
  3. LEAP Market – A new market recently created (in 2017) specifically for SMEs and a platform to help them grow

Each market has their own requirements. The Main Market is the most common one among the three. A BHD company must fulfill certain requirements before it can be listed here. This includes having a minimum number of shareholders and certain financial turnover. After it gets listed in the Main Market, shares can be traded and that is where additional funds can be injected into the company.

Best performing companies

Many companies have been listed in Bursa Malaysia since it began in which some have already been de-listed while others are suffering trying to survive. It would not be possible to have any public listed company which had not gone through any form of the downturn but one which is financially-sound and balanced would continue to perform consistently. Take Malaysia Airlines for example. What was once a blue chip stock and among the top invested companies no longer carry that sort of stature today. Based on turnaround and consistency, the best performing public listed companies in Malaysia include:

  1. Public Bank Berhad
  2. Telekom Malaysia
  3. DRB-Hicom Berhad
  4. UMW Holdings Berhad
  5. Bursa Malaysia
  6. Genting Berhad

Resources for company performance

Every investor will need to carry out some form of research of the public listed company before venturing into buying its shares. One such resource is the annual report which is released by every public listed company. This requirement will give any investor and potential investor the opportunity to understand the financial health of the company and what the future plans are going to be. Sources of annual reports are:

  1. From the company itself – Every shareholder will be entitled to a copy of the annual report. Some companies still post them to the homes while many are now available in digital format
  2. Website – This is the current and most cost-effective practice where you can download the annual report from the website of the public listed company

Types of industries

In the Main Market of Bursa Malaysia, stocks are commonly grouped together among categories to offer better efficiency for investors in understanding what they are trading at. In the past, MESDAQ was meant for technology stocks while there were the Main and Second Markets. Within the Main Market, the former markets are combined. Hence, categorizing the stocks will make it a lot easier. This includes:

  1. Construction – Counters like AZRB, Gamuda, Ho Hup, Melati, Zecon
  2. Consumer Products – includes counters like Apollo, BAT, F&N, Hwa Tai, Spritzer, UMW
  3. Industrial – Counters like AISB, BSL Corp, Kian Joo, Melewar, Seacera
  4. Finance – Counters in this sector include Allianz, Bursa, CIMB, Insas, Maybank, MBSB, Takaful
  5. Plantations – Counters include Chinteck, Far East and TDM
  6. Technology – Includes counters like Binacom, Elsoft, Mesiniaga
  7. Properties – Bertam, E&O, Guoco, Mahsing, Malton
  8. Hotels – Landmark and Shangri-La are among the counters in this category
  9. and others

Technology stocks

One of the major industries among all the companies in Bursa Malaysia comes from the technology sector. The KTEC or Technology Index shows the performance of companies in this sector. In the past, there is the MESDAQ market which lists all the companies in these industries. What makes this index so significant is that it is usually influenced by technology companies across the world. A move by companies like Microsoft or Apple will surely have an impact in the technology stocks in Bursa Malaysia as well. Among the companies that are listed in this sector include:

  1. Unisem Bhd
  2. Iris Corp Bhd
  3. Globetronics Technology Bhd
  4. Malaysian Pacific Industries Bhd

About Bursa Malaysia

Formerly known as the Kuala Lumpur Stock Exchange or KLSE, it is now known as Bursa Malaysia housed within Exchange Square. The history of Malaysia’s main bourse dates back to 1920.

  1. It was then the Singapore Stockbrokers’ Association
  2. After 1930, it was re-registered in 1937 as the Malayan Stockbrokers’ Association
  3. In 1960, the Malayan Stock Exchange started for public share trading
  4. In 1964, the Stock Exchange of Malaysia started
  5. A year later, it was known as the Stock Exchange of Malaysia and Singapore
  6. Then, the Stock Exchange of Malaysia and the Stock Exchange of Singapore came into effect in 1973
  7. In 1976, it became the Kuala Lumpur Stock Exchange Berhad
  8. KLSE was then renamed as Bursa Malaysia in 2004
  9. A year later, it was listed on the Main Board

Main Market

For those who are more familiar with the KLSE concept, the Main Market is slightly different.

  1. It is actually the combination (or referred to as a merge) between the Main and Second Board companies
  2. The merger took place back in 2009 and has been actively traded ever since
  3. This was done to align the processes and to make the procedures more efficient
  4. Blue chip counters are in this market including those like Petronas and AirAsia
  5. There are more than 800 companies in the Main Market
  6. Products are traded on a normal office day, with which the top performing 30 companies will then be used to derive the FTSE Bursa Malaysia KLCI Index (FMB KLCI)

ACE Market

The ACE market meanwhile will involve more sponsor-driven counters. This is seen as a secondary market where companies with the potential to grow and profit can be listed.

  1. Companies here are smaller as compared to the Main Market
  2. They are evaluated based on their potential to grow
  3. They could, in the future move to the Main Market

FBM KLCI

Short for FTSE Bursa Malaysia KLCI, this is the index made up of the 30 largest companies in the Main Market of Bursa Malaysia based on their full market capitalization. This index is:

  1. Used to gauge the performance of the stock exchange
  2. Calculated based on a market-force formula
  3. Used by traders and speculators

Company performance

Judging by the stock performance of a company is only one of the methods to know if the stock can be profitable. In most cases, you will need to:

  1. Carry out technical analysis. This gives you the tool to evaluate the future based on the past trends
  2. Keep yourself abreast of the current news of the company
  3. Knowing the industry or sector it is in makes a lot of difference as well
  4. Look at the big picture. Is there a future for this industry and what is the government doing about it?

Other terms

Besides knowing the ins and outs of the stock exchange, you should know certain crucial terms. This includes:

  1. IPO – Initial Public Offering. This is when a company goes public and the shares start to be traded on the stock exchange
  2. Bullish market – When the stock exchange is experiencing an increase of prices in its entirety.
  3. Bearish market – The opposite of the bullish market. Good time to buy shares

The Blockchain wave and cryptocurrency in Malaysia

Cryptocurrency has taken the financial sector by storm and this has affected Malaysian companies in many ways. In fact, many companies (both private and public) have started to take note of how this might affect the way business will be run in the near future. If cryptocurrencies become legal tender, it will affect the entire economy and that will affect the stock market. At the moment, there is yet to be any public listed company venturing into blockchains and cryptocurrencies fully. However, a recent report has surfaced that companies are now having preliminary discussions with statutory bodies like the Securities Commission on the possibilities of offering ICO or Initial Coin Offering in the Malaysian market. Its similar to IPO in stock market terms.

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