Limit Up and Limit Down for IPO and Stocks on Bursa Malaysia
•By Maher Saham
Artikel ini juga tersedia dalam Bahasa Melayu
Loading...
In stock investing, Bursa Malaysia has set price limits on how much a listed stock can rise or fall in a single trading day.
This mechanism is designed to control price movements during trading sessions and prevent unhealthy syndicates from causing speculative price manipulation.
With the Limit Up and Limit Down functions, stock prices are capped and can only rise or fall to the predetermined price levels.
There are 2 types of Limits you need to know:
This article will explain both the Limit Up and Limit Down functions in detail.
Limit Up is the maximum price level a stock can reach in a single day. It is divided into 2 categories:
For stocks priced at RM1 and above, the maximum price increase is 30% from the previous day''s closing price.
For example, if stock ABC closed at RM1.25 yesterday:
The Limit Up for stock ABC would be:
RM1.25 + (RM1.25 X 30%) = RM1.625
For stocks priced below RM1, the maximum increase is 30 sen / RM0.30 per day from the previous day''s closing price.
If stock XYZ closed at RM0.50, then the Limit Up would be:
RM0.50 + RM0.30 = RM0.80
What you need to know is that once the Limit Up level is reached, the stock price will not rise any further beyond this Limit Up level.
Limit Down is the lowest price level a stock can fall to in a single day. It is also divided into 2 categories:
For stocks priced at RM1 and above, the maximum drop in a day is 30% from the previous day''s closing price.
For example, if stock ABC closed at RM1.25 yesterday:
The Limit Down for stock ABC would be:
RM1.25 - (RM1.25 X 30%) = RM0.875
Meanwhile, for stocks priced below RM1, the maximum drop is 30 sen / RM0.30 from the previous day''s closing price.
This means if stock XYZ closed at RM0.50, then the Limit Down would be:
RM0.50 - RM0.30 = RM0.20
Once a stock''s price falls to the Limit Down level, it cannot drop any further beyond this point.
Based on this PDF document from the Bursa Malaysia website:
In summary, an IPO stock can rise up to 400% or 5 times its IPO price on the day it is listed on Bursa Malaysia.
Checking these prices in the Mplus app is straightforward. Search for the stock counter name, then tap on the QUOTE section.
Limit Up and Limit Down for stocks above RM1
Refer to the red box in the image to see the limit up and limit down for this counter.
Limit Up and Limit Down for stocks below RM1
Similarly, refer to the red box in the image to see the limit up and limit down for this counter. Easy to read on the MPlus App, isn''t it?
Limit Up is the maximum price a stock can reach in a single trading day, while Limit Down is the minimum price level. These limits are set by Bursa Malaysia to control price movements and prevent excessive speculation.
These limits are designed to curb price speculation by syndicates and prevent uncontrolled stock price surges or crashes. They protect investors from extreme price volatility.
Yes, the price limits differ based on the stock''s price range. Stocks below RM1 have a fixed limit of RM0.30, while stocks at RM1 and above have a 30% limit. You can check the exact limits on trading platforms like the Mplus App.
On the Mplus App, you can view the limit up and limit down on the stock counter''s information display. Refer to the section showing the maximum and minimum allowable prices for the trading day.
The maximum and minimum prices of any stock can only rise or fall according to the price limits set by Bursa Malaysia. Limit Up and Limit Down exist to prevent uncontrolled price speculation in the market.
To start investing in stocks on Bursa Malaysia, you must have a CDS account. Open a CDS account now with us. To learn the basics of stock investing, get your free ebook from Mahersaham.