Category: Investments

Pursuant to the earlier media release “Bursa Malaysia And RAM Collaborate On A New Debt Fundraising Platform,” issued on 22 December 2022,” Bursa Malaysia Berhad (“Bursa Malaysia” or the “Exchange”) and RAM Holdings Berhad (“RAM”) are pleased to announce that our joint venture entity, Bursa Malaysia RAM Capital Sdn Bhd (formerly known as BM RAM Capital Sdn Bhd) (“BR Capital” or “Company”) had on 2 June 2023 received approval-in-principle from the Securities Commission Malaysia (“SC”) in relation to BR Capital’s application to be registered as a Recognized Market Operator under the SC’s Guidelines on Recognized Markets, to manage and operate a new debt fundraising platform.

“We are appreciative of the SC’s support and are excited to be making good progress towards offering this new solution – investment notes as an alternative option for fundraising by small to mid-sized companies, while providing more investment opportunities to investors,” said Datuk Muhamad Umar Swift, Chief Executive Officer of Bursa Malaysia. “This upcoming fixed income solution is part of our aspiration towards truly being a multi-asset exchange.”

Chris Lee, Group CEO and Executive Director of RAM, echoed the sentiment, stating, “The approval-in-principle from the SC is a significant milestone for both RAM and Bursa Malaysia. The platform shall broaden fund raising avenues for both listed and unlisted entities whilst providing new fixed income investment opportunities to all investors. This collaborative achievement positions us to drive sustainable growth in the Malaysian capital market.”

About Bursa Malaysia

Bursa Malaysia is an exchange holding company incorporated in 1976 and listed in 2005, and has grown to be one of the largest bourses in ASEAN today. Bursa Malaysia operates and regulates a fully-integrated exchange offering a comprehensive range of exchange-related facilities, and is committed to Creating Opportunities, Growing Value. Learn more at www.bursamalaysia.com.

About RAM Holdings Berhad

RAM Holdings Berhad (RAM Group) is a leading provider of independent credit ratings, research, training, risk analysis, ESG analytics and bond pricing. Formerly known as Rating Agency Malaysia Berhad, RAM Holdings was established in November 1990 as a catalyst for the domestic debt capital market and as the nation’s first credit rating agency. In 2007, our rating operations were novated to a newly formed subsidiary, RAM Rating Services Berhad. Apart from credit ratings, the RAM Group also offers myriad solutions ranging from economic and debt market research, data & analytics and sustainability services. In 2016, RAM Sustainability commenced offering Sustainability Ratings, a tool and framework that measure companies’ environmental, social and governance (ESG) performance. Bond Pricing Agency Malaysia Sdn Bhd (BPAM) became a wholly owned subsidiary of RAM Holdings Berhad on 30 June 2021. The company is the sole provider of bond-pricing and valuation data on the Malaysian bond market and is regulated by the Securities Commission Malaysia.

Today’s investing landscape features a confluence of challenges. The current economic environment of high inflation and higher cost of living has led to heightened uncertainty in financial markets. Meanwhile, an ageing population is adding pressure on retirement savings. As a result of these global trends, Malaysians are experiencing new vulnerabilities in the course of their investment journeys.

The Institute for Capital Market Research Malaysia (ICMR) embarked on a nationwide study to better understand these new age vulnerabilities. We found the underlying reasons for investor vulnerability are multifaceted and can be broadly grouped into three categories based on their characteristics. In this article, we will explore the first and most common category: financial behaviour and accessibility.

More Decisions, More Fatigue

Our survey findings reveal that most Malaysian investors experience vulnerability due to their financial behaviours and accessibility to financial products and services. 93% of surveyed respondents have three or more behavioural and access drivers that could make them feel vulnerable, which includes their perception of their own financial status, savings behaviour, and financial literacy. 

In terms of perceived financial status, most Malaysians reported they are either financially unstable or are living paycheck-to-paycheck, which influences their level of financial stress and wellbeing. 74% of those who are financially unstable and 54% who are living paycheck-to-paycheck claimed to always feel stressed and worried when thinking about their financial futures.

Past behavioural studies have shown that the more decisions that one is forced to make, the more fatigue one develops, which consequently leads to a deteriorating quality of decision-making – a concept known as decision fatigue. Moreover, people who frequently experience financial stress tend to experience decision fatigue more intensely compared to others. 

Indeed, 61% of those who are financially unstable and 42% of those living paycheck-to-paycheck admitted that they get mentally drained when thinking about financial planning and would prefer to follow their family and friends’ decisions. As highlighted in our previous article, this makes them more susceptible to being involved in scams, misled, and creating investment bubbles.

Not Saving Enough For Difficult Times

Beyond financial status, ICMR also set out to understand Malaysians’ savings behaviour, given the importance of having enough savings to ensure financial resilience to any unexpected life shocks. Based on guidance by the Employees Provident Fund (EPF), it is recommended that Malaysians have at least  20% monthly savings and 6 months’ worth of emergency savings.

One common assumption is that Malaysians are not generally aware of these savings benchmarks, but ICMR’s findings suggest otherwise. While 43% of respondents know they should save 20% of their monthly income, only 23% actually follow through. Similarly with emergency funds, 34% know they need 6 months’ worth or more, but only 22% claim to have that amount of buffer for emergencies.

Another assumption is that those with higher incomes can save the most, while financial stress is commonly associated with those in the lower income group. Our study again challenges these assumptions, as our findings indicate that 68% of respondents in the high-income group are saving less than 20% of their monthly income and 76% have less than 6 months’ worth of emergency savings.

Since Malaysians are already struggling to save regularly and are not able to financially sustain themselves during difficult times, it is hard to expect them to show better saving habits for a longer-term goal such as retirement. This then leads to another factor that defines investor vulnerability in Malaysia – retirement savings or a lack thereof.

Lack Of Retirement Readiness

Based on the assumption that one will retire at the age of 55 and life expectancy in Malaysia is 75, one’s savings need to last for at least 20 years. However, when we asked our respondents how long they expected their current and EPF savings to last after retiring, 75% felt that their total retirement savings would last them less than the required 20 years post-retirement.

This is mainly due to the lack of retirement savings, especially among retirees and gig workers. 62% of surveyed gig workers claimed to have less than RM50,000 worth of retirement savings, and what is more worrying is that 70% of surveyed retirees have less than RM250,000 worth of retirement savings – less than what the EPF estimates is adequate to cover basic needs for 20 years after retirement.

While those who are 40 years old and below tend to meet the basic retirement savings threshold as determined by EPF, as soon as they reach 41 years old, more than half of the EPF contributors are not able to meet the target basic savings for each age group. This is probably because they start withdrawing from their EPF accounts for home loans, children’s education, or even health expenses.

To supplement the findings from our survey, ICMR also conducted qualitative interviews with retirees in the Klang Valley. The interviewees shared that they did not know what to do with the big sum of savings that became accessible to them after retiring. As a result, they tended to invest on a trial-and-error basis and followed advice from friends and family – with many plagued by failing investments.

Overconfident About Financial Literacy

Although Malaysians are generally not saving enough and unprepared for retirement, ICMR’s findings also show that they are overconfident with regards to their financial knowledge. Only 39% of respondents scored 80% – 100% in a simple financial literacy test prepared by ICMR – but 67% of respondents claim to be highly confident of their financial capabilities.

Topics such as compounding interest, inflation, risk and return, cost of borrowing and diversification, are considered as the most basic to test respondents’ understanding of some of the key financial concepts. However, it is concerning to see that 59% of respondents who scored lower than 80% (less than 4 questions correct) feel highly confident about their financial capabilities.

The overconfidence effect is observed when people’s subjective confidence in their own ability is greater than their objective (actual) performance. Overconfidence has been attributed to a range of issues. More generally, among investors, overconfidence has been associated with excessive risk-taking and is most likely to lead them to make wrong financial decisions.

Overconfidence also relates to one’s optimism bias during investment or broader financial decision making. Optimism bias refers to the tendencies for people to overestimate the probability of positive events and underestimate the probability of negative events happening to them in the future. This kind of thinking is dangerous and often leads investors to make reckless financial decisions.

Investor Vulnerability Is Multifaceted

Making good financial decisions is not an easy task for most people. It involves overcoming biases and considering the satisfaction of short-term gains against the things that are beneficial for us in the long-term. The challenges of making good financial decisions get even more difficult when factors such as financial stress hinders one from making optimal decisions with a sound mind.

Nonetheless, ICMR’s study highlights that different ‘types’ of vulnerability are frequently overlapping and closely interconnected – meaning that financial difficulties are not always easily attributable to a single particular ‘cause’. Stay tuned for our next article as we explore how situational circumstances and industry-related issues can also lead to new vulnerabilities for Malaysian investors.

This article is part of a content series by the Institute for Capital Market Research (ICMR). Follow ICMR’s Facebook page to stay updated on behavioural tips and insights for better investing habits. To learn more about ICMR’s research on new age vulnerabilities, visit www.icmr.my or download the full report.

About the Authors

Malacca Securities Sdn Bhd announced the launch of M+ Global, a one-stop, all-in-one global trading platform for all traders, with access to a diverse range of international investment opportunities, starting with two of the world’s largest global stock markets – the United States and Hong Kong.

M+ Global is a revolutionary digital trading platform which empowers Malaysians to navigate the dynamic global market, seize opportunities, and take control of their financial future. Through a single account, users can access over 7,000 stock listings in the United States, 3,000 in Hong Kong and unlimited tradeable derivatives, including warrants, ETFs, CBBCs and REITs. This unparalleled access to foreign exchanges allows Malaysians to invest in major corporations such as Apple, Tesla, Alibaba, Tencent, and many more.

Lim Chia Wei, Managing Director of Malacca Securities Sdn Bhd, said, “We’re excited to take Malaysians on a journey to win the world with M+ Global. By offering access to the United States and Hong Kong markets, Malaysians now have greater investment opportunities in some of the largest and most successful companies across various sectors and industries globally.”

M+ Global is the first digital trading platform in Malaysia which offers basic real-time data in partnership with the National Association of Securities Automated Quotations (NASDAQ). This leading global technology company provides trading, exchange technology and information services to the world’s financial markets. Through this partnership, Malaysians will now have access to Real-Time-Quotes (RTQs), which will boost their investment experience and help them make better-informed investment decisions with access to the actual price of a security in real-time.

In addition, M+ Global is the only digital trading platform in Malaysia which offers a Shariah Screening feature for global stocks, allowing Malaysians to identify Shariah-friendly stocks efficiently and accurately on a global scale. This unique feature on the platform was offered to Malaysians through a partnership with IdealRatings Inc, a global leader in providing Islamic finance solutions. With just a few taps, modern-day investors seeking to invest according to Islamic principles can now swiftly identify and gain instant access to a comprehensive selection of Shariah-compliant stocks.

Chuck Lim, Head of Business of Malacca Securities Sdn Bhd, said, “We believe in empowering our users with the tools and insights they need to succeed. We’re thrilled to offer our users a seamless platform that combines cutting-edge technology and real-time market intelligence. With M+ Global, traders can easily and confidently navigate the complexities of global investments, unlocking endless possibilities for growth and success at their fingertips.”

The M+ Global is a seamless and intelligent platform integrated with 24/7 stock-mover monitoring and real-time news, providing users exclusive access to timely global financial information to stay up-to-date on important market-moving events and make more informed investment decisions. Users can personalise their watchlist news, customise their alerts and get instant updates on top trending news from front-line financial news sources such as Benzinga, MT Newswire and many more.

With over two hundred licensed dealer representatives with foreign trade insights, Malaysians can leverage their expertise and diversify their portfolios through global investment for both Shariah-compliant and non-Shariah stocks in the United States and Hong Kong markets at a competitive price.

M+ Global offers a first-of-its-kind customer support experience with 24-hour multi-channel customer support service on in-app live chat, WhatsApp, hotline, email and live stream.

“Our rich sixty-year history as an award-winning homegrown stockbroking company places us at the forefront of stock market innovation. Building on the success of M+ Online in 2012, we are committed to staying ahead of the curve to provide a first-class digital experience to enhance the investment experience for our valued customers. We’re paving the way for a new era of wealth-building with Malaysians, starting with the launch of M+ Global,” said Lim Chia Wei during the launch of M+ Global.

“ As a hybrid broker with sixty years of experience, M+ Global was created to stand out in the market through the seamless integration of cutting-edge technology and personalised human expertise. Our powerful global trading platform provides easy access to a wide range of investment opportunities across global markets. However, we understand that technology alone is not enough, which is why our team of two hundred licensed dealer representatives bring their industry knowledge to provide a comprehensive and personalised trading experience,” added Lim Chia Wei.

Malacca Securities Sdn Bhd, the creator of M+ Global, is committed to continuously improving and advancing the platform to provide Malaysians with an intelligent and accessible gateway to the global marketplace. Users can expect more upcoming features such as initial public offering (IPO), conditional order, US fractional shares and options trading, which will be rolled out soon to the public in stages.

To celebrate the launch, M+ Global is hitting the town with free shares under its “Unbox Mystery Stock” campaign! Starting from 15^th May 2023, new users who register for an M+ Global account will receive one (1) unboxing chance to get one (1) free stock randomly (Apple, Tesla, Google, Shell, Coca-Cola, Manchester United, Krispy Kreme or Snapchat) when they deposit a minimum of RM1,000 into their account for the first time. Additionally, they can also access thirty days (30) of free live quotes to the United States and Hong Kong markets.

For more information and updates about M+ Global, log on to https://global.mplusonline.com/. To learn more about the “Unbox Mystery Stock” campaign, visit: https://m.global.mplusonline.com/activitiesr/mystery-box?activityId=14&_scnl=WSI2. M+ Global is available for download on the Apple App Store, Google Play and Huawei App Gallery.  Alternatively, you can sign up for an M+ Global account here: https://m.global.mplusonline.com/kh/status/entry/transit?lang=en_US&_scnl=WSI2.

About Malacca Securities Sdn. Bhd.

Malacca Securities Sdn. Bhd. is an award-winning homegrown stockbroking company with 60 years of experience providing investment solutions for retail investors and corporate organisations. Malacca Securities is listed as a participating organisation under Bursa Malaysia and licensed by the Securities Commission Malaysia. Malacca Securities remained a pioneer in the industry after surviving several world crises through innovations to make stockbroking more accessible to Malaysians. Malacca Securities is committed to revolutionising the financial landscape through technology and innovation, starting with the launch of M+ Online in 2012 to boost investors’ trading journey in the local scene. With its 60th anniversary in 2023, Malacca Securities launched M+ Global, a one-stop global trading platform with real-time market data, news and alerts to help Malaysians make better-informed trading decisions to navigate the global market confidently.

About M+ Global

M+ Global is a one-stop, all-in-one global trading platform created by Malacca Securities Sdn. Bhd., an award-winning homegrown stockbroking company with 60 years of expertise in building wealth together with Malaysians. Malaysians can trade globally with M+ Global, starting with two of the world’s largest and most important global markets – the United States and Hong Kong. M+ Global is Malaysia’s first digital trading platform that offers NASDAQ basic real-time data. M+ Global is the only trading platform offering Shariah Screening for global stocks. As a one-stop, all-in-one global trading platform for all traders, M+ Global is equipped with all the professional tools, news and customisable alerts to enhance Malaysians’ trading experience on a global scale seamlessly. 

The Securities Commission Malaysia (SC) has taken action against Huobi Global Limited, and its Chief Executive Officer Leon Li for operating a digital asset exchange (DAX) in Malaysia without registration.

Accordingly, the SC has issued a public reprimand against Huobi Global Limited, and Leon Li for operating illegally in Malaysia.

In addition, the SC has ordered Huobi Global Limited to stop its operations in the country, including to disable its website and mobile application on several platforms such as Apple Store, Google Play and any other digital application platform.

Huobi Global Limited has also been directed to cease circulating, publishing or sending any advertisements, whether in email or on social media platforms, to Malaysian investors. 

Leon Li, as the CEO, has also been specifically ordered to ensure that the above directives are carried out.

This decision comes after concerns about the platform’s compliance with local regulatory requirements and protecting investors’ interests. The SC views this breach seriously, as operating a DAX without obtaining the SC’s registration as a Recognised Market Operator (RMO) is an offence under Section 7(1) of the Capital Markets and Services Act 2007.

The SC urges Malaysian investors who have been using Huobi Global Limited to immediately cease trading through its platform, withdraw all their investments, and close their accounts.

Investors are strongly advised to invest and deal with RMOs that are registered with the SC. Registered RMOs have undergone strict regulatory scrutiny and are required to adhere to strict guidelines so that investors are protected under Malaysia’s securities laws. Those who invest with unlicensed or unregistered entities or individuals are exposed to risks such as fraud and may not be protected under Malaysian securities laws.

Investors should exercise caution when choosing investment platforms and to always do their due diligence before making any investment decisions. Additionally, investors should be wary of investment schemes that promise high returns with little risk, as they may be too good to be true. By taking these precautions, investors can safeguard their investments and avoid falling victim to fraudulent schemes.

RHB Research recently published the Top 20 Malaysia Small Cap For 2023 (20 Jewels), which marks the 19th edition that is part of a regional compendium of 80 top small-cap investment ideas from four ASEAN countries. Just as market sentiment was beginning to turn following the worst of the pandemic, as the interest rate cycle entered a matured stage, sentiment took another knock from the banking crisis in the US and Europe in the aftermath of the swift monetary policy tightening by the US Federal Reserve.

Local investor sentiment has remained tentative in the past year as investors were drawn to other regional opportunities and asset classes. Nonetheless, investors continued to show interest in winning small-cap ideas to generate alpha for their respective portfolios – especially as valuations have also retraced. The stock selection remains paramount, and investors should focus on fundamentally strong companies that have the potential to deliver above-industry growth, as well as turnaround candidates.

Notably, the Top 20 Malaysia Small Cap Jewels 2022 outperformed the broad market with a holding period return of 15.7%, beating the FBM KLCI’s and FBM SC’s returns of -8.5% and -5.5%.

Without further ado, let’s look at the list of Top 20 Malaysia Small Cap Companies For 2023 (20 Jewels) by RHB Research:

1. Aemulus Holdings

2. Apex Healthcare

3. Bonia Corporation

4. Hiap Teck Venture

5. Kumpulan Kitacon

6. Kronologi Asia

7. Lee Swee Kiat Group

8. MCE Holdings

9. Malayan Flour Mills

10. OM Holdings

11. P.I.E. Industrial

12. Scicom (MSC)

13. SDS Group

14. Supercomnet Technologies

15. Thong Guan Industries

16. Tune Protect Group

17. Uzma

18. Vestland

19. VSTECS

20. Wah Seong Corporation

Here’s the Top 20 Malaysia Small Cap Companies For 2023 (20 Jewels) at a glance:

The Top 20 Malaysia Small Cap Companies For 2023 (20 Jewels) are spread across seven sectors with an average market cap of MYR597m. The consumer and industrial products & services sectors feature prominently, making up 50% of our picks. All but four – which are ACE Market-listed – of the 20 names are in the Main Market. None of the 20 companies featured this year are within RHB Research’s existing coverage as they continue to seek new investment ideas.

*All investors are advised to conduct their own independent research into individual stocks that are listed in the Top 20 Malaysia Small Cap Companies For 2023 (20 Jewels) before making any decision to buy or sell. Investors are also advised that past stock performance is no guarantee of its future price.

Investing in stocks can be a challenging task, especially for beginners. With so much information available, it can be overwhelming to determine which stocks to buy and which ones to avoid. Here are 5 financial ratios to quickly analyse stocks. It is an effective tool that can help investors make informed decisions when analyzing stocks.

These ratios provide insight into a company’s financial health, growth potential, and profitability, allowing investors to assess its investment potential.

In this article, we will explore the different types of financial ratios and how they can be used to analyze stocks, providing you with a quick and efficient way to evaluate investment opportunities.

Read: 3 Types Of Stocks That Every Investor And Trader Must Know

1. Earnings Per Share (EPS)

EPS is one of the financial ratios to quickly analyse stocks. According to Investopedia, earnings per share (EPS) is a company’s net profit divided by the number of common shares it has outstanding.

Source: educba

Company’s EPS vary based on changes in earnings, total number of outstanding shares, or both. A company can increase its EPS by increasing its earnings or reducing its number of shares through share buybacks.

Typically, company with high EPS are considered as a profitable company. Usually, we can find EPS value in a company’s income statement.

Read: As An Investor, Here Are 3 Things To Look For In Financial Statements

2. Price To Earnings Ratio (P/E)

P/E ratio is one of the financial ratios to quickly analyse stocks. PE ratio measures the relationship between a company’s stock price and its earnings per issued share. Sometimes it is also known as the earnings multiple.

Since the P/E ratio relates to the share price and earnings per share, some investors prefer stocks with lower P/E. However, a high PE does not mean the share price is overvalued. A company can have a high P/E because investors expect high future growth and thus buy it from now. This causes the price has started to increase due to high demand.

Tips for you, always compare a company to other in the same industry. Some of you may wonder, what about companies without P/E ratio? Companies that have no earnings or are losing money does not have a P/E ratio.

3. Return On Equity (ROE)

Return on Equity shows how well a company uses shareholders investment funds to generate income. ROE is calculated by comparing the proportion of net income against the amount of shareholder’s equity.

Source: wallstreetmojo

Investors love high ROE stocks because it shows the company is good at converting its equity financing into profits. If you are looking for a strong company with good ROE, a return on equity ratio of 15% – 20% is considered good.

This is why ROE is one of financial ratios to quickly analyse stocks, that is being used by most investors.

Read: 5 Reasons Why We Lose Money In The Stock Market

4. Net Tangible Asset (NTA)

Net tangible asset is one of the financial ratios to quickly analyse stocks. NTA is the value of all tangible assets minus all liabilities in a business.

Some examples of net tangible assets are land, buildings, vehicles, equipment, and etc. There are few significances of NTA such as:

• Have definite value
• Help in production
• Can be sold and thus raise cash
• Subject to depreciation
• Used as collateral / security

Usually, investors will compare current stock price to NTA value. It can help to determine whether a company is undervalued or overvalued. If the current share price is smaller than the NTA value, the stock is considered undervalued and vice versa.

5. Dividend Yield (DY)

Why does investors have to pay attention to dividend yield compared to dividend payout? Dividend yield displayed in percentage represents the annualized return a stock pays out in dividends.

So, what is a good dividend yield? Dividend yield ranging from 5% – 7% are generally considered to be good. Anything above 7% is considered very good.

But remember, other than high dividend yield, consistency in distributing dividend is equally important. You will not want to receive dividend for only one time.

The legendary Warren Buffet focused on dividend investing to get steady cash flow over the long-term. There are few stocks in Buffet’s portfolio that he has been holding for long period. That’s why dividend yield is one of the financial ratios to quickly analyse stocks.

However, investors also must keep in mind that high dividend yield may not attractive if the stock price is declining. What is the point of receiving dividends but you are losing more money from the declining stock price right?

Read: Create Your Stock Watchlist With These Simple Steps

Conclusion

Financial ratios are a powerful tool for investors to analyze stocks and make informed investment decisions. By examining a company’s financial statements and using various ratios, investors can gain valuable insights into a company’s financial health and potential for growth.

While no single ratio can provide a complete picture of a company’s financial health, using a combination of ratios can help investors make more informed decisions about which stocks to invest in. You can start your own fundamental analysis by looking at these 5 financial ratios to quickly analyse stocks.

However, it is important to remember that investing in the stock market carries risks, and no investment strategy can guarantee success. By using financial ratios as part of a larger investment strategy, investors can navigate the complexities of the stock market and work towards achieving their financial goals.

Read: Using The CANSLIM Formula To Choose Good Stocks

The choices we make – the things we buy, the neighbourhoods we live in, the restaurants we go to – are influenced by our social networks. Our financial and investment choices are no exception. Thousands of behavioural studies have shown that community members’ and peers’ savings and investment decisions tend to have a causal effect on individual decisions.

These effects are propagated through direct social interactions such as word of mouth or, as we highlighted in our last article, through online channels, including social media platforms like TikTok and Instagram. Be it online or offline, social pressures such as the implicit desire for conformity, acceptability, and social identity can powerfully affect investment decision-making.

Trust Matters For Young People

It is not surprising that ICMR’s survey of millennials and Gen Z found that most respondents prefer online sources for information about investment products. Nonetheless, the people closest to them in real life still play a role in shaping their financial decisions. Indeed, friends and family ranked as the second most popular source of information in ICMR’s survey.

During qualitative interviews with the respondents, one aspect that frequently came up was the importance of trust to millennials and Gen Zs. Most seek out financial advice from family and friends that they personally trust. Financially literate investors may add on their own online research, but those with lower financial literacy tended to immediately heed advice from friends they trust.

Moreover, previous studies have shown that millennials and Gen Z tend to lack trust in traditional institutions like news media and business, political, or religious leaders. Thus, it makes sense why they might turn to the people around them instead for financial or investment advice, regardless of whether their advice is actually good or bad.

 “I definitely need to talk to friends before I invest, especially if they’ve also invested in the same thing. Recently, a friend told me he had cashed out his unit trust investments after making 15% gains. I will invest in that same unit trust once I have a bit more money.”

– Zaim, 34, Lalamove driver

Relatability Is A Key Driver Of Trust 

The rise of social media influencers over the past decade has reshaped how younger generations form opinions, buy from brands, and get their questions answered. Financial and investment companies have leveraged the popularity of influencers through collaborations, sponsorships, and paid-for advertisements to promote their investment products and services.

Nonetheless, ICMR notes that when it comes to personal finance, some respondents preferred talking to their peers as they found many personal finance influencers unrelatable. This was due to the perception that most personal finance influencers had financial goals that seemed unattainable, which ended up being demotivating. 

Relatability is thus a critical trust driver for millennials and Gen Z investors. The notion of relatability goes deeper than relevancy by tapping into fundamental human truths: the need for belonging, to feel seen and valued, and to be accepted by a social group. In the end, people are highly social beings that are influenced by social norms and social identity when making key financial decisions.

“I stopped following influencers because they had goals like save RM100,000 before 30. I knew my savings was nowhere near there and it just demotivated me even more.” – Calvin, 29, performance marketing manager

More Talk About Money

While many old-school cultural taboos have been broken or at least softened, the stigma surrounding money talk is still prevalent today. For older generations, finances are often perceived as the final conversational frontier among friends and family members. However, ICMR found that millennials and Gen Z want to break this taboo and discuss money matters more openly.

Many of our interviewees felt that conversations among friends about money should be normalised, and that it can help each other navigate financial decisions. This is in line with other global studies, which found that millennials and Gen Z are a lot more transparent with peers about their money compared to previous generations.

Being more open and transparent about money might be the result of younger generations being less filtered about other aspects of their lives as well on social media. Yet even among close friends, it can be uncomfortable for young people to bring up topics like salary or earnings (not to mention financial hardships), especially if they were taught never to ask someone how much they make.

“I think we should normalise talking about our finances with friends. I’ve learned so much from talking with my friends. That’s how I first learned about StashAway and Luno. But I think I’ll only be comfortable talking with friends of similar income levels. It might get awkward if the other party makes a lot more or a lot less.”

– Sofia, 29, engineer

Promoting Financial Security And Independence

Understanding how social preferences can influence individual decision-making has wider societal implications. Herding behaviour, or when investors behave like their peers instead of using their own information or making independent decisions, can lead to individuals being involved in scams, being misled, or creating investment bubbles.

Young investors must learn to seek advice from various sources to gain the knowledge and confidence they need to make sound investment decisions that promote their financial security and independence. Establishing open and transparent communication about personal finances can empower the next generation to achieve their financial goals and enhance their well-being.

This article is part of a content series by the Institute for Capital Market Research (ICMR). Follow ICMR’s Facebook page to stay updated on behavioral tips and insights for better investing habits. To learn more about ICMR’s research on millennials and Gen Z, visit www.icmr.my or download the full report.

About the Authors

As a busy working professional, startup investing can be an exciting and financially rewarding journey. It also allows you to diversify your investment portfolio. Early stage startups are usually not “bankable” as they cannot fulfil banks stringent loan requirements. So raising funds by selling their shares tend to be the usual way to extend their cash runway.

As a startup lawyer, I have acted for both investors and companies seeking to raise funds using equity crowdfunding (ECF), one of the increasingly popular alternative fundraising method. In this article, I want to share 5 steps to invest in ECF in Malaysia.

But before we get started on the 5 steps to invest in ECF in Malaysia, let us cover what is ECF and how does it work in the context of the Malaysian regulations.

What Is ECF And How Does It Work In Malaysia?

ECF is an alternative fundraising method for entrepreneurs seeking to raise funds for their business. As an investor, you will receive new shares to be issued by the company in exchange for buying shares in the business.

In Malaysia, ECF is a regulated activity under the purview of the Securities Commission of Malaysia (SC). Therefore, every ECF platform needs to be licensed by the SC before a business is permitted to raise funds and be hosted on such an ECF platform.

5 Steps To Invest In ECF In Malaysia

As promised, here are the steps to invest in ECF in Malaysia.

1. Get Registered As An Investor

Before finding and investing in a campaign, you must register and get verified as an investor. To date, ten ECF platforms are regulated by the SC. Different ECF platforms may have different businesses seeking investments. Do the necessary research on these ECF platforms and find out their past and existing campaigns to see if they are aligned with your risk appetite and interests.

After filling up the personal details, your investment limit will be fixed based on your investor category. The SC’s rules prescribed three investor categories, namely retail investor, angel investor or a sophisticated investor. An angel investor who is accredited by the Malaysian Business Angels Network can invest up to RM500,000 per campaign while there is no investment limit for a sophisticated investor (i.e. high net worth individual or high income earner).

You can register as an investor in multiple ECF platforms.

2. Choose A Business To Invest

Once verified as an investor, you can invest in campaigns hosted on the platform. The platforms usually send newsletters to your email and updates on social media on new businesses looking for funding, so be sure to keep checking for new businesses that may interest you.

Generally, as a non-professional investor, you may want to invest in a company that you understand based on your industry’s knowledge and aligned with your value.

3. Read The Disclosures About The Business And  Carefully

One of the next steps to invest in ECF in Malaysia, is not to get hyped out due to the ‘FOMO’ ‘Fear of Missing Out’ factor. Like any asset class, you need to figure out the features and characteristics of the investment and the risks involved.

As an investor you get the go through the  find a list of documents known as the disclosures displayed on the campaign page. They usually include the latest audited financial statements, management accounts, an investment pitch deck containing the business plan, management team, their expertise, funding amount requested, and the breakdown of how the funds will be used for the business.

If there is anything that you need further input, you can ask the management team during the pitching sessions hosted by the platform or even ask the platform to set up a meeting with the company’s representatives to ask further questions on certain matters.

Also, all the material legal documents and agreements such as the term sheet (setting out the investment offer), subscription agreement and shareholders agreement are also uploaded on the website. Be sure to read them and understand your rights as a crowdfunding investor.

At this stage, you may want to engage your professional advisers (i.e. legal counsel, auditors and financial planner) that you usually work to help you conduct the necessary due diligence on the business to help you decide whether to invest in a company.

4. Transfer The Funds Into The ECF Trust Account

Once you have decided how much to invest in a campaign based on the investment offer, you will need to transfer the cash into a trust account using online transfer. The platform usually sends an email within a few working days to confirm that they have received your investment.

All the funds raised will be held by a custodian as an escrow agent and will only be disbursed to the company once the campaign is successful. If the company fails to raise the minimum targeted sum, the platform will refund back the money.

5. Monitor Your Investments

The final steps to invest in ECF in Malaysia, is to monitor your investments. Usually, the company’s management team will send you periodical (usually on a semi-annual or annual basis) updates setting out the progress of the business growth to the latest financials.

As an investor, you will also get regular updates and meet-ups with the management team to discuss about the business progress.

Read: Are Alternative Investments Right For Me?

Conclusion On The 5 Steps To Invest In ECF In Malaysia

Investing in high-growth companies via equity crowdfunding can be a great way to diversify your investment portfolio. But like all types of investments, equity crowdfunding is risky, and you can lose all your capital. As an investor, read and understand the risks before investing in a crowdfunding campaign.

But if you are raring to go, those are the steps to invest in ECF in Malaysia. It’s not that hard is it?

Read: Making Sense of Alternative Assets in Your Investment Portfolio

About the Author

Izwan Zakaria is a lawyer at Izwan & Partners, a corporate law firm helping startups do business and raise capital in Malaysia and overseas. He can be contacted at izwan@izwanpartners.com