Financial Glossary: 50+ Stock Market & Investment Terms for Malaysian Investors
•By Mahersaham Team
Artikel ini juga tersedia dalam Bahasa Melayu
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New to investing and confused by financial jargon? You are not alone. The Malaysian stock market has plenty of terminology that can be confusing - from PE Ratio to candlestick, from IPO to margin call.
This financial glossary lists over 50 of the most important investment and stock market terms for Malaysian investors. Each term is explained in plain language, with context on how it is used on Bursa Malaysia.
A stock (or share) represents a unit of ownership in a company. When you buy shares of a company on Bursa Malaysia, you become a partial owner of that company. For example, buying 100 units of Maybank shares means you own a small portion of Maybank.
Bursa Malaysia is Malaysia's official stock exchange. It was formerly known as the Kuala Lumpur Stock Exchange (KLSE). It is the marketplace where stocks, bonds, and derivatives are traded. There are two main boards: Main Market (for large companies) and ACE Market (for growth companies). More information can be found on the official Bursa Malaysia website.
One lot of shares on Bursa Malaysia equals 100 units of shares. This is the minimum quantity for regular trading. For example, if a share price is RM1.00 per unit, one lot costs RM100. For quantities less than 100 units, it is called an odd lot and must be traded through a special market.
Bid is the highest price a buyer is willing to pay for a stock. Ask (or offer) is the lowest price a seller is willing to accept. The difference between the bid and ask is called the spread. A small spread indicates that the stock has high liquidity.
Liquidity refers to how easily an asset can be bought or sold without significantly affecting its price. Stocks with high trading volume such as Maybank or CIMB are considered highly liquid. Penny stocks with low volume are considered less liquid.
Volume is the total number of share units traded within a specific period (usually one day). High volume indicates strong investor interest in a particular stock. A sudden spike in volume often signals that a significant price movement is about to occur.
Bull market is a period when stock prices are generally rising, typically up 20% or more from recent lows. Bear market is a period when stock prices decline 20% or more from recent highs. In Malaysia, the last bull market occurred in 2024-2025 when the KLCI surpassed the 1,700-point level.
A broker is a licensed individual or firm that helps you buy and sell shares on Bursa Malaysia. In Malaysia, brokers are also known as remisiers. You need a CDS account and a trading account through a broker to start trading. To open a CDS trading account and start investing, you can do so online.
A CDS account is an account that stores your share ownership records electronically. It is managed by Bursa Malaysia Depository. Every investor must have a CDS account before they can buy shares on Bursa Malaysia. This account is different from a trading account, which is used to place buy and sell orders.
An IPO is the process where a private company offers its shares to the public for the first time through a stock exchange. In Malaysia, Bursa Malaysia IPOs often receive strong interest as investors have the opportunity to buy shares at the offering price before they begin trading on the open market.
Fundamental analysis is a method of evaluating stocks based on a company's financial health and business prospects. It involves studying financial statements, management, industry, and the overall economy. Fundamental investors believe that the stock price will eventually reflect the true value of the company.
PE Ratio measures how much investors are willing to pay for every ringgit of a company's earnings. Formula: Share Price / Earnings Per Share (EPS). A high PE means investors expect strong future growth. PE Ratio varies by sector in Malaysia - the technology sector typically has a higher PE compared to the plantation sector.
EPS is a company's net profit divided by the total number of outstanding shares. Formula: Net Profit / Total Outstanding Shares. An increasing EPS year over year indicates the company is becoming more profitable. It is one of the most fundamental metrics in fundamental analysis.
A dividend is a payment distributed by a company to its shareholders from its profits. Not all companies pay dividends. In Malaysia, stocks such as REITs, utility companies, and major banks are known for consistent dividend payments.
Dividend yield measures the dividend return relative to the current share price. Formula: (Annual Dividend Per Share / Share Price) x 100%. Example: if a stock is priced at RM5.00 and pays a dividend of RM0.25 per year, the dividend yield is 5%.
A balance sheet is a financial statement that shows a company's financial position at a specific date. It is divided into three main sections: Assets (what the company owns), Liabilities (what the company owes), and Equity (the net worth of the owners). Understanding the balance sheet is a fundamental skill for assessing a company's financial strength.
The income statement shows a company's financial performance over a specific period - how much the company earned (revenue) and how much it spent (expenses). The bottom line - net profit or net loss - is the most important figure that investors watch.
The cash flow statement shows the actual inflow and outflow of a company's cash. It is divided into three categories: operations, investing, and financing. A company can be profitable on paper (income statement) but short on actual cash. The cash flow statement reveals a company's true performance.
ROE measures how efficiently a company uses shareholder equity to generate profit. Formula: (Net Profit / Shareholders' Equity) x 100%. An ROE of 15% means the company generates RM0.15 in profit for every RM1 of shareholder equity. The higher the ROE, the more efficient the company's management.
The gearing ratio measures a company's level of debt relative to shareholders' equity. A high gearing ratio means the company relies heavily on debt to finance operations - this increases risk, especially during economic downturns. When gearing is too high, it can be dangerous for investors.
Market cap is the total value of a company based on its current share price. Formula: Share Price x Total Outstanding Shares. On Bursa Malaysia, companies are classified by size: Large cap (> RM10 billion), Mid cap (RM2-10 billion), and Small cap (< RM2 billion).
NTA is the net tangible asset value of a company after deducting liabilities and intangible assets. Formula: (Total Assets - Intangible Assets - Total Liabilities) / Total Shares. NTA is important for stock valuation - if the share price is well below NTA, the stock may be undervalued.
PBV compares a stock's market price with the company's book value. Formula: Share Price / Book Value Per Share. A PBV below 1.0 means the stock is trading below book value - but this does not necessarily mean it is cheap, as there may be fundamental reasons for it.
Technical analysis is a method of studying stock price movements and volume through charts to predict future price direction. Unlike fundamental analysis which focuses on a company's health, technical analysis believes that all information is already reflected in the stock price.
A candlestick is a type of chart that displays four price data points in one period: opening price (open), closing price (close), highest price (high), and lowest price (low). A green candlestick means the price went up, while a red candlestick means the price went down. Certain candlestick patterns can provide clues about the next price direction.
Support is a price level where a stock tends to stop falling because there is strong buying demand. Resistance is a price level where a stock tends to stop rising because there is strong selling pressure. Both levels are important for determining entry and exit points in trading.
A moving average is a line on a chart that shows the average stock price over a specific period. SMA (Simple Moving Average) calculates the average price equally, while EMA (Exponential Moving Average) gives more weight to recent prices. The 50-day and 200-day moving averages are the most commonly used.
RSI is a momentum indicator that measures the speed and magnitude of price changes. Its value ranges from 0 to 100. An RSI above 70 indicates a stock may be overbought, while an RSI below 30 indicates a stock may be oversold.
MACD is a trend indicator that shows the relationship between two moving averages. When the MACD line crosses above the signal line, it gives a buy signal. When it crosses below, it gives a sell signal. MACD is popular among traders on Bursa Malaysia.
A breakout occurs when a stock price moves past a significant resistance or support level with high volume. A breakout above resistance is often considered a strong buy signal, while a breakout below support is considered a sell signal.
Fibonacci retracement is a technical tool that uses Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%) to identify potential support and resistance levels. Traders use it to predict how far a price will retrace (pull back) before continuing the original trend.
Bollinger Bands consist of three lines: one moving average in the middle, and two lines (bands) above and below. The bands expand during high volatility and contract during low volatility. A price touching the upper band may be overbought, while a price at the lower band may be oversold.
A trendline is a straight line drawn on a chart connecting two or more price points. An uptrend line connects increasingly higher lows, while a downtrend line connects increasingly lower highs. Trendlines help identify the overall direction of price movement.
An interim dividend is a dividend paid during the financial year, usually after quarterly results. A final dividend is paid after annual results and must be approved by shareholders at the Annual General Meeting (AGM).
Ex-date is the date from which a stock trades without the right to dividends. If you buy shares on or after the ex-date, you are not entitled to receive that dividend. Entitlement date is the date by which you must hold the stock to be eligible to receive the dividend.
A rights issue is an offer to existing shareholders to buy new shares at a discounted price, proportional to their current holdings. Example: a 1-for-5 rights issue means for every 5 shares you hold, you are entitled to buy 1 new share at a discounted price. Its purpose is for the company to raise additional capital.
A bonus issue is the distribution of free shares to existing shareholders. Example: a 1-for-2 bonus issue means for every 2 shares you hold, you receive 1 free share. The share price usually adjusts downward according to the bonus ratio, so the total value of your holdings does not change.
Share split divides one share into multiple units (example: 1 share at RM10 becomes 2 shares at RM5 each). Consolidation combines multiple shares into one (example: 10 shares at RM0.05 become 1 share at RM0.50). Neither action changes the total value of your holdings.
A share buyback occurs when a company buys back its own shares from the open market. This reduces the number of outstanding shares, which can increase EPS and the share price. Share buybacks on Bursa Malaysia are often seen as a sign of management confidence in the company's prospects.
A warrant is an instrument that gives the holder the right (but not the obligation) to buy shares at a specific price (exercise price) within a certain period. On Bursa Malaysia, warrants are denoted with suffixes like -WA, -WB. Warrants have an expiry date - after that date, unexercised warrants become worthless.
An ETF is an investment fund traded on the stock exchange just like regular shares. It tracks the performance of an index, sector, or asset. On Bursa Malaysia, there are ETFs for gold, the KLCI index, and specific sectors. Gold ETF 0828EA is among the popular ETFs with Malaysian investors.
A REIT is a listed real estate investment trust. REITs own and manage portfolios of properties (shopping malls, offices, hospitals) and distribute at least 90% of their income as dividends. In Malaysia, popular REITs include IGB REIT, Pavilion REIT, and Sunway REIT.
A unit trust is a collective investment fund managed by professional fund managers. Investors' money is pooled and invested in a portfolio of stocks, bonds, or other assets. ASB (Amanah Saham Bumiputera) is the most popular unit trust in Malaysia, managed by Amanah Saham Nasional Berhad (ASNB).
Bonds are debt instruments where investors lend money to the government or companies and receive fixed returns (coupons) periodically. Sukuk is the Shariah-compliant version that uses an asset-based sale structure instead of interest-bearing loans. Malaysia is the world's largest sukuk market, accounting for over 40% of global sukuk issuance according to Securities Commission Malaysia.
Shariah-compliant stocks are shares approved by the Shariah Advisory Council of the Securities Commission as adhering to Islamic principles. On Bursa Malaysia, over 75% of listed stocks are Shariah-compliant. The list is updated twice a year (May and November).
Derivatives are financial instruments whose value is based on an underlying asset. Examples: futures and options. On Bursa Malaysia Derivatives, popular instruments include FKLI (KLCI index futures) and FCPO (crude palm oil futures).
Margin trading means buying shares by borrowing money from your broker. You put up a margin (deposit) - for example 50% - and the broker finances the remaining 50%. This allows you to control a larger position, but also increases your risk. If the stock drops significantly, you may receive a margin call.
A margin call is a notification from your broker that the value of your margin account has fallen below the required minimum level. You need to add more deposit or sell some of your shares. If you fail to act, the broker has the right to forcibly sell your shares (force selling) to cover the losses.
GDP measures the total value of goods and services produced by a country within a specific period. It is a key indicator of economic health. Malaysia's GDP in 2025 grew by 4.8% according to Bank Negara Malaysia. Healthy GDP growth is generally positive for the stock market.
Inflation is the rate at which the general prices of goods and services increase over time. It reduces the purchasing power of your money. Moderate inflation (2-3%) is considered healthy, but high inflation can force Bank Negara to raise interest rates, which is typically negative for the stock market.
The OPR is the benchmark interest rate set by Bank Negara Malaysia. It influences lending and savings interest rates across the economy. The current OPR (February 2026) is 3.00%. An OPR increase raises borrowing costs, while an OPR cut stimulates lending and spending.
The Malaysian Ringgit (MYR) is Malaysia's official currency. The ringgit exchange rate against the US dollar (USD/MYR) affects the stock market, especially exporters and importers. A strong ringgit is good for importers but compresses profit margins for exporters.
FDI is direct investment by foreign entities in businesses in Malaysia. High FDI indicates strong foreign investor confidence in the Malaysian economy. Sectors receiving the most FDI in Malaysia include manufacturing (especially semiconductors), services, and mining.
A stock market index measures the performance of a group of stocks representing a particular market or sector. In Malaysia, FBMKLCI (FTSE Bursa Malaysia KLCI) consists of the 30 largest and most liquid stocks. Other indices include FBM Small Cap, FBM Emas, and FBM Hijrah (Shariah-compliant).
Compounding occurs when the returns on your investment generate additional returns. Example: RM10,000 earning 8% per year becomes RM10,800 in the first year. In the second year, you earn 8% on RM10,800 (not the original RM10,000). This is called 'interest on interest' and is the most powerful force in long-term investing.
Diversification means spreading your investments across various assets, sectors, and geographies to reduce risk. The saying "don't put all your eggs in one basket" describes this concept. Smart investors diversify across stocks, bonds, property, gold, and possibly international assets.
DCA is a strategy of investing a fixed amount regularly (example: RM500 every month) regardless of market conditions. When prices are low, you buy more units. When prices are high, you buy fewer units. On average, this strategy reduces the impact of market volatility and eliminates the emotional pressure of trying to 'time the market'.
The risk-to-reward ratio compares potential loss against potential gain in a trade. Example: if you are willing to lose RM100 for a potential gain of RM300, your ratio is 1:3. Disciplined traders typically set a minimum of 1:2 - meaning the potential gain must be at least double the potential loss.
A stop loss is an automatic order to sell a stock when its price falls to a certain level. Its purpose is to limit losses. Example: if you buy a stock at RM2.00 and set a stop loss at RM1.80, the stock will be sold automatically if the price falls to RM1.80, limiting your loss to 10%.
A portfolio is your entire collection of investments - including stocks, bonds, ETFs, unit trusts, property, and other assets. Good portfolio management involves periodic rebalancing to ensure your asset allocation remains aligned with your investment goals.
Muslim investors in Malaysia are obligated to pay zakat on share holdings that meet the nisab and haul requirements. The zakat rate is 2.5% of the holdings' value. Calculation can be based on the market value of shares on the date the haul period is complete, or based on the method prescribed by the respective state zakat authority. Further reference can be found at Lembaga Zakat Selangor.
Day trading is a strategy of buying and selling shares within the same day. Day traders capitalize on small intraday price movements to generate profit. It requires high discipline, strict risk management, and a deep understanding of technical analysis. On Bursa Malaysia, brokerage costs can eat into a day trader's profit margin.
Swing trading is a strategy that holds shares for several days to several weeks to capitalize on price 'swings'. Compared to day trading, it requires less time to monitor the market and incurs lower transaction costs.
Contra trading is the practice of buying and selling shares within the T+2 settlement period (two business days) without making full payment. If the price goes up, you profit without committing full capital. But if the price drops, you bear the loss plus brokerage costs. Contra trading is high-risk and is not recommended for new investors.
T+2 means trade settlement occurs two business days after the transaction. When you buy shares on Monday (T), payment and delivery of shares occurs on Wednesday (T+2). This is the standard settlement period on Bursa Malaysia.
'Goreng saham' is a local Malaysian term for illegal stock price manipulation through coordinated trading activities. It typically involves penny stocks with low volume. Prices are artificially inflated to attract retail investors, then suddenly crashed. This activity is prohibited by the Securities Commission Malaysia and is subject to legal action.
A financial glossary is a reference that compiles and explains important terms in finance and investing. It is important because understanding these terms enables you to read financial reports, understand market news, and make smarter investment decisions.
Fundamental analysis evaluates stocks based on a company's financial health (financial statements, PE Ratio, ROE), while technical analysis studies price charts and volume to predict future price movements. Many successful investors combine both methods.
There is no fixed minimum capital. Theoretically, you can start by buying 1 lot (100 units) of the cheapest stock. With a stock priced at RM0.05 per unit, the minimum capital is just RM5 (excluding brokerage costs). However, RM1,000-RM5,000 is more realistic for starting a meaningful portfolio.
Shariah-compliant stocks are shares approved by the SC's Shariah Advisory Council as adhering to Islamic principles. You can check the list of Shariah-compliant stocks on the Securities Commission website (sc.com.my). The list is updated twice a year.
A high PE Ratio means investors expect high future growth - typically technology companies. A low PE Ratio may mean the stock is undervalued or the company is facing problems. It is important to compare PE Ratio with the sector average, not in absolute terms.
The main risk of margin trading is amplified losses. Because you are using borrowed money, your losses are also multiplied. You can lose more than your original capital, and the broker can forcibly sell your shares (force selling) through a margin call if the account value falls below the minimum level.
Zakat on shares is calculated at a rate of 2.5% of the value of share holdings that meet the nisab and haul (one complete year). The calculation method depends on the investment intention - whether for long-term savings or active trading. Refer to your state zakat authority for specific guidance.
ETFs are traded on the stock exchange throughout trading hours (like regular shares), while unit trusts can only be bought and sold at the daily NAV price. ETFs typically have lower management fees because most are passively managed (tracking an index).
Understanding financial terminology is the first step to becoming a smarter investor. This financial glossary covers stock market basics, fundamental and technical analysis, corporate actions, and macroeconomics - everything you need to start reading financial reports and market news with confidence.
If you are ready to begin your investment journey, the next step is to open an account and start with the right knowledge.
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