Share Margin Financing & IPO Financing: What Malaysian Investors Must Know
•By Maher
Artikel ini juga tersedia dalam Bahasa Melayu
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In the world of stock investing, leverage is a double-edged sword. It can multiply your profits — but it can also wipe out your capital in the blink of an eye. Two financing products gaining popularity among Malaysian retail investors are Share Margin Financing (SMF) and IPO Financing.
Both allow you to invest with more money than you actually have. But before you get excited about the potential for multiplied returns, you need to fully understand how these mechanisms work, what they cost, and what the real risks are.
This article will break down both products in detail — with a focus on M+ Online (Malacca Securities) as the primary reference platform.
The basic mechanism of SMF is fairly straightforward:
Each broker sets different ratios. At M+ Online (Malacca Securities), the leverage structure for Collateralised Accounts is as follows:
| Leverage | Financing Ratio (Principal : Financing) | Min Capital Required | Min Application Value |
|---|---|---|---|
| 2x | 50% : 50% | RM 10,000 | RM 20,000 |
| 5x | 20% : 80% | RM 20,000 | RM 100,000 |
| 10x | 10% : 90% | RM 50,000 | RM 500,000 |
Practical example with 2x leverage: You put up RM10,000 as capital. The broker adds another RM10,000 as a margin loan. Your total buying power: RM20,000.
5x leverage example: Capital of RM20,000, broker lends RM80,000. Total buying power: RM100,000. But remember — if the stock drops 20%, you have already lost 100% of your original capital.
This is the most critical risk in margin financing. A margin call occurs when the value of your collateral falls below the minimum level set by the broker.
At M+ Online, the critical thresholds are:
| Level | Margin Ratio | What Happens |
|---|---|---|
| Normal | ≥ 166.67% | No action required — trading as usual |
| Margin Call | ≤ 150% | Broker contacts you — you need to top up collateral |
| Forced Selling | ≤ 130% | Broker force sells your shares without your permission |
Imagine you use 5x leverage: capital of RM20,000, buying shares worth RM100,000. Margin loan: RM80,000.
This is why margin financing is not for everyone. It requires active monitoring and strict risk management discipline.
Interest rates are the primary cost of margin financing. Here is a comparison of interest rates from major brokers in Malaysia:
| Broker / Bank | Interest Rate (p.a.) | Notes |
|---|---|---|
| Hong Leong Bank | Promo: 2.88% (first 3 months), ESG SMF: 4.95% | Min RM100k facility |
| AM Equities (AmInvest) | 6.00% – 6.50% | SBR + 3.50% max |
| Moomoo MY | 6.8% | For IPO financing |
| Affin Hwang | ~8.0% | Leverage up to 2.5x |
| AM Equities (Discretionary) | 8.0% | From T+3 |
| Malacca Securities (M+ Online) | 10.0% | Per Terms of Service |
| Inter-Pacific Securities | 10.5% | — |
Important note: Malaysia's OPR is currently at 2.75%, while the Standardised Base Rate (SBR) is at 3.00%. Margin financing interest rates are typically much higher than housing or personal loan rates.
Although M+ Online charges 10% p.a. — which is relatively high compared to competitors — the platform offers other advantages such as leverage up to 10x and access to Malaysia's first IPO Financing facility.
IPO Financing is a short-term financing facility that allows investors to apply for more IPO shares than they could afford with their own cash.
The concept is simple: you have RM1,000 in cash. With IPO financing at 10x leverage, you can apply for IPO shares worth RM10,000. This increases your chances of getting an allocation in oversubscribed IPOs.
The main reason: first-day IPO returns in Malaysia are highly profitable. According to data from Bursa Malaysia:
With a track record like this, many retail investors want to maximise their IPO allocations — and this is where IPO financing plays a key role.
On 25 February 2025, Malacca Securities launched Malaysia's first IPO Financing platform through M+ Global. This made M+ Online a pioneer in offering this facility digitally to retail investors.
While IPO financing may seem attractive, there are several risks to consider:
Not every IPO succeeds. If a stock lists below the offer price (breaks price), you not only lose money — you still need to repay the financing loan plus interest.
In IPOs that are oversubscribed many times over, even if you apply for RM100,000, you may only receive an allocation of RM1,000. Financing helps increase your chances, but it does not guarantee a full allocation.
IPO financing interest starts accruing from the allocation date — not the listing date. This means you may be paying interest for 1-3 weeks before the stock is listed on Bursa and can be sold.
Bursa Malaysia regulations allow only one application per CDS account for each IPO. You cannot apply multiple times using the same account.
| Aspect | Share Margin Financing | IPO Financing |
|---|---|---|
| Purpose | Buy listed shares in the secondary market | Apply for new IPO shares |
| Duration | Revolving — no time limit | Short-term — from application to listing |
| Leverage | 2x to 10x (depending on broker) | Up to 10x (depending on IPO terms) |
| Interest | 6% – 10.5% p.a. (depending on broker) | 6.8% – 10% p.a. (depending on broker) |
| Margin call risk | Yes — forced selling if collateral drops | No — short-term financing only |
| Cost if unsuccessful | Interest is still charged | No charges if allocation is not received |
| Suitable for | Active investors with experience | Investors looking to maximise IPO allocation |
Malaysia is expected to remain the IPO leader in Southeast Asia in 2026. According to The Edge Malaysia, here are some IPOs attracting attention:
| Company | Market | Notes |
|---|---|---|
| Sunway Healthcare Holdings | Main Market | Valuation ~RM16 billion, among the largest IPOs |
| SkyeChip Bhd | Main Market | Local chip design firm |
| Empire Premium Food Bhd | Main Market | Operator of Empire Sushi |
| RT Pastry Holdings Bhd | ACE Market | Popular bakery chain |
| Adnex Group Berhad | — | Listing on 17 March 2026 |
With an active IPO pipeline, IPO financing is becoming an increasingly relevant tool for retail investors looking to participate in these opportunities.
There is no difference — they are the same term. "Share Margin Financing" (SMF) is the official term used by brokers and the Securities Commission Malaysia for share purchase loan facilities.
For 2x leverage, the minimum capital is RM10,000 with a minimum application value of RM20,000. For higher leverage, refer to the leverage table above.
This depends on individual fiqh (Islamic jurisprudence) perspectives. Most scholars view that loans with interest (riba) are not permitted in Islam. However, some institutions offer Islamic Margin Financing based on the Murabahah or Commodity Murabahah concept. Check with your broker whether they offer Shariah-compliant facilities.
The broker will execute forced selling — automatically selling shares in your portfolio to reduce the loan. If the sale proceeds are still insufficient, you remain indebted to the broker.
No. With IPO financing at M+ Online, if you do not receive a share allocation, your money is returned in full with no charges.
Margin financing in Malaysia typically covers only shares listed on Bursa Malaysia. For foreign markets, you need to check the specific terms with your broker. M+ Global offers access to the US market, but margin terms may differ.
IPO financing is short-term — typically from the application date to the listing date (1-3 weeks). After the stock is listed, you can sell and settle the financing.
10x leverage means your capital is only 10% of the total investment. A mere 10% drop in the stock is enough to wipe out your entire capital. It is extremely risky and only suitable for very experienced investors with robust risk management strategies.
Margin financing and IPO financing are powerful leverage tools — but they are not for everyone. Understand the mechanics, calculate the real costs, and ensure you have an exit strategy before using any of these financing products.
If you are new to stock investing and want to understand the ins and outs of the market before using leverage, a smart first step is to build a solid foundation.
Open your CDS trading account through M+ Online here — the registration process takes only 15 minutes.
Download the free ebook Stock Market Basics to understand key concepts before you start investing with leverage.