SMF - Comparison of Share Margin Financing between Maybank, CGS-CIMB & RHB

Hi Reader,

Please refer to the table below for the comparison of share margin financing facility provided by Maybank, CGS- CIMB and RHB.

If you are interested to know more about SMF , don’t hesitate to fix an appointment with us. We’ll get back to you asap.😀

Thank you.

SMF - How do share margin financing work and how to calculate

Hi Reader, 

You refer to the earlier post to have better understanding about Share margin financing (SMF.
This post will show you the calculation of SMF

Margin Multiplier

There is a multiplier on the value of the pledged collateral which defines the maximum financing amount.

Eg. There is 2.5x financing for pledged FD, thus by pledging RM100k FD, investor will get RM250k trading limit.

 

Margin of Finance (MOF)

Margin of Finance = (Total Outstanding - FD amount) / Total share value*

Let say, the approved MOF is 60%, with RM100K pledge FD, you can purchase a shares at RM250K

 MOF = (RM250K-RM100K)/RM250K
          =  60%

 

Scenario 1 - Total Share Value increase to RM300k

MOF will reduce to 50% which means investor can afford to purchase more shares as long as maintains within the approved MOF of 60%.

MOF = (RM250K-RM100K)/RM300K

          =  50%

 

Scenario 2 - Total Share Value decrease to RM200k

MOF will increase to 75% which triggers a margin call. Investor will have to top up cash or sell some shares to bring the MOF back to 60% to avoid force selling action by bank

 MOF = (RM250K-RM100K)/RM200K

          =  75%

If you are interested to know more about SMF , don’t hesitate to fix an appointment with us. We’ll get back to you asap.😀

Thank you.

SMF - What is Margin Call ? How could an investor respond to a Margin Call?

 

What is Margin Call?

A margin call is triggered when the investor’s equity, as a percentage of the share portfolio value, falls below the account's maintenance margin requirement.

This is a request of the Bank to the client to top up the Margin to meet the maintenance margin requirement.  When a margin call is triggered, investor is usually given  3 market days to regularise. Otherwise, will initiate the force selling.

However,  if the margin of finance (MOF) exceed the approved force selling level, investor will have to satisfy the margin call on the same day, otherwise the bank will at liberty to set off any cash and sell/realise any collateral held by the bank.

Eg, Let say the MOF is up to 60%, the margin call is triggered when MOF  is > 72% and given 3 market days to satisfy the margin call. However, the force selling -margin call is triggered if MOF is >85% or at the expiry of the margin call notice, whichever is earlier.

How could an investor respond to a Margin Call

1) Depositing cash in the brokerage account to top up the value

2) Selling margined securities to meet the account's maintenance margin requirement

3) Depositing new shares in the account to increase the collateral value without increasing the loan amount 

If you are interested to know more about SMF , don’t hesitate to fix an appointment with us. We’ll get back to you asap.

Thank you.

SMF - Ways to manage margin account risk / How to avoid margin call

Share Margin Financing (SMF) could a great tool for wealth creation in the stock market. However, you have to be well aware about the risk you might face when enter the position.

Leverage risk
Higher returns are assured by taking greater risks, thus it could be a double-edged sword. Margin can magnify your losses just as dramatically as it can boost returns. 

Revision the value of the collateral securities
The broker may at any time revise the value of the collateral securities after the estimation of the risk, based, for example, on market factors. If such revision of the collateral securities  resulted a margin account falling below the minimum margin requirement, the broker will immediately issues a "margin call", requiring the investor to bring the margin account back into line. 

Risk of being unable to meet a margin call
You are require maintain a specific percentage of equity in your account as specified by the broker. If margin of finance falls below the minimum equity maintenance requirement, your account may incur a margin call. This means you will need to add cash or securities to your account to increase your equity. If you do not act promptly, your brokerage firm may sell securities you own without notifying you, in order to increase the equity in your account. You are not entitled to an extension of time on a margin call. 

 

How to avoid a margin call

Leave cash cushion in the account

Instead of investing all the money in financial products, the investor can set aside some cash deposits to help reduce the likelihood of a margin call, position your portfolio to withstand significant fluctuations in the overall value of your collateral without falling below your minimum equity requirement

 

Invest in assets with significant return potential
The securities you buy on margin should, at a minimum, have the potential to earn more than the cost of interest on the loan 

Set a personal trigger point
Investors should set their own maintenance margin, which should be above the broker’s minimum required balance. Keep additional financial resources in place to contribute to your margin account when your balance approaches the margin maintenance requirement. 

Pay interest regularly

Interest charges are applied to the investor's account every month with no specific repayment schedule. The investors is advisable to make regular interest payment to avoid  loan accumulation  and keep the loan balance in control 

Protect your capital

When the market is going against your trading/investment plan, you may consider to protect your capital by selling off some positions.

If you are interested to know more about SMF , don’t hesitate to fix an appointment with us. We’ll get back to you asap.

Thank you.

 

 

 

How to do e-subscription for right issue (step by step guide)

 

Hi reader, 

Please refer to the step by step guide below to do e-subscription for Right issue

Sign up as user of TIIH Online (for individual shareholder)

1.    1. Using your computer, access the website at https://tiih.online

2.   2. Sign up as a user by completing the registration form, registration is free

3.    3. Upload a softcopy of your MyKad (front and back) or your passport

4.     4. Administrator will approve your registration within one to two working day and notify you via email

5.     5. Activate your account by re-setting your password

6.     6. You may also refer to the video for step by step guide.

https://youtu.be/REZPCCuvPTo

 Notes:

(i) If you are already a user of TIIH Online, you are not required to sign up again.

(ii) An email address is allowed to be used once to register as a new user account, and the same email cannot be used to register another user account.

 

Proceed with e-Subscription (for individual shareholder)

1.     1. After the release of the Abridged Prospectus (“AP”), Notice of Provisional Allotment (“NPA”) and Right Subscription Form (“RSP”), login with your user name (i.e. e-mail address) and password

2.     2. Select the corporate event: “AAGB right issue”

3.     3. Read and agree to the Terms & Conditions and confirm the Declaration

4.     4. Select the CDS account number that you wish to subscribe for the Rights Shares

5.     5. Indicate the number of Rights Shares you wish to subscribe and number of Excess Rights Shares you wish to apply

6.     6. Review & confirm your e-Subscription

7.     7. Proceed to pay for the amount of subscription, RM10 of stamp duty and RM5 of handling fee for each e-RSF/CDS account through the online payment gateway (FPX and Maybank2u)

8.     8. Print payment receipt and e-RSF for your record

T    Thank you.

 

SMF - What & Why about Share Margin Financing ?

 What is Share Margin Financing (“SMF”)

 Share Margin Financing is a facility that allows investors to borrow money from the brokerage firm to leverage for a large investment position. This enables the investors to increase your financial power and boost your investments in  shares by magnify the investment exposure in which can increase the potential returns (or losses) from a trade.  This facility is designed for active and intelligent investors to take advantage of the market opportunities arise from time to time to expand the portfolio.

All you need to do is to place either cash, fixed deposit or marginable securities as collateral for the credit facility applied for.

  

Why use SMF?

 “You may often heard about don’t borrow to invest in stock market, you may end up to lose big.”

In business world,  the company do borrow for business expansion. They will do their due diligence, market research to come out with a business case to evaluate the potential risk and return. When the projected return is satisfactory and completely understand the risk involved, will start borrow to run the project. Without borrowing, the company will never grow as fast.

Treat Investing like running a BUSINESS, do your homework  from both fundamental analysis & technical analysis perspective. Fundamentally ,to understand the company’s background,  the future prospect, the owner of the company, the company value, the macroeconomic view. While for technically analysis, find the uptrending stock. If you are confident to earn return more than 6% of SMF interest, you may consider to take up SMF facility.

 The opportunity to leverage assets
When you buy securities on margin, you are able to leverage the value of securities you already own to increase the size of your investment. This enables you to potentially magnify your returns, assuming the value of your investment rises.

A convenient line of credit

Once your account has been approved for margin borrowing, you can take out a margin loan at any time, without any additional forms or applications. This ready access to cash may prove to be convenient in a number of scenarios, such as when you are unemployed, experience an unexpected medical bill, or need a quick way to access cash for any other reason. If your brokerage account includes checking, you can simply write a check.

Low interest rates
The interest charges incurred with a margin loan is lower than than what you would pay for a credit card cash advance or a personal loan which is around 10%-18% interest rate.

Repayment flexibility

So long as your debt doesn't exceed your margin maintenance requirement, you can pay back your loan on your own schedule.

If you are interested to know more about SMF , don’t hesitate to fix an appointment with us. We’ll get back to you asap.😀

Thank you.

How to apply IPO via Affin Online

 How to apply IPO via Affin Online

There are quite a few interesting IPOs that were listed in the market and their performance to date are excellent (Click to see the IPO Performance). I guess there will be an opportunity for us to catch the sweet treat from the capital rising activity of the new IPO.

First of all, who are eligible to apply IPO ?

1.Malaysian resident and citizen above 18 years old.

2.Has a Central Depository System (CDS) Direct Account registered in your own name.

3.Nominees or third party CDS Accounts are not allowed   

3.   If you wish to open a new direct trading account, please click here to make appointment, we will reach out to you asap. Else, you may apply yourself by click the direct link

Let us get the latest IPO as example, there are a lot good information you can grab from the Bursa IPO Summary and the announcement page.

Kindly take note for below:
1) You may only make ONE share application for an IPO. Submitting multiple applications is an offence under the Capital Markets and Services Act, 2007. 

2) The eIPO application must be made via single person saving account that matched to the CDS/trading account name.

3) The IPO allotment is determined by the balloting process.

 

Timetable for IPO

Please find below for the Step by Step application at Affin Online. I believe that the other internet banking will share the similar process.

Step 1- Please Login to your internet banking – Click on Investment > IPO > New IPO Application

Step 2 – Choose the IPO that you plan to apply

Step 3 –  Proceed to Key your CDS Number (without "-" as per your  statement– should be in the format of 15 digit 

STEP 4-Fill up your Number of share to apply and Submit

Congratulation, you are done for the application. You can get the result on the allotment day by checking the status at your online banking account.

How to Check your status -Just Click VIEW/CANCEL-Refund IPO status 

Or u can check via https://tiih.com.my/index.php?p=results 
If the allotment to you is successful, you will get the shareholding on the day before listing at your CDS account. 

Hope this step by step guide is useful to you. Please press the ‘Like’ button on the top right on our homepage and share to your friend.

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