A stock is a security that represents ownership equity in the issuing corporation. Stocks are listed and transacted on stock exchanges such as the Bursa Exchange, Singapore Exchange, Hong Kong Exchange, Australian Securities Exchange and New York Stock Exchange.

Trading of Stocks and other investment products can carry a high level of risk, and is more suitable for customers with medium to high risk profile. It is important you understand the possible risks involved in trading Stocks, which include but are not limited to the following:

Equity Risks

Equity Price Risks refers to the risk of losses because of adverse movements on the prices of securities. The market price of a stock moves as a result of supply and demand factors. If demand on a stock outpaces its supply, with all other factors remaining the same, the price of the stock is expected to increase. Vice versa, if the supply is greater than the demand, we expect the price of the stock to fall. A stock price can fall to zero. In other words, the stock loses its entire value and shareholders will lose their entire investment.

Concentration Risks

Concentration Risks refers to the potential for loss arising from concentration in a single stock, sector and/or geographical region. For example, if a portfolio only consists of stocks in the tourism sector, it could be excessively exposed in the event of a health pandemic that will negatively impact the price of stocks in the tourism sector.

Liquidity Risks

Liquidity Risks arises when investing into stocks with low traded volume. Liquidity refers to how easily a stock can be bought or sold in the market. Investors may find it difficult to sell stocks which have poor liquidity and may end up exiting the position at an unfavourable price.

Foreign Exchange Risks

Foreign Exchange Risks occurs from the change in value of one currency in relation to another. There are several ways foreign exchange volatility can impact total returns. For example, a rising Malaysian Ringgit can negatively impact returns when an investor in Malaysia invests in a US dollar denominated stock. However, a rising Ringgit also means an investor in Malaysia will need to pay less to make the transaction.

Interest Rate Risks

Interest Rate Risks refers to the potential loss resulting from a change in interest rates of the country where the stock is domiciled. An increase in interest rate may not have a direct impact on the stocks but it could see both consumers and businesses reduce spending. An increase of interest rates may see more investors turn to other asset classes such as fixed-income securities.

A Corporate Action is an event that brings about a material change to the underlying stock, or an event that is initiated by a firm that has an impact on its shareholders.

Cash Dividends

A Cash Dividend is cash payment to shareholders by the company from profits or retained earnings. The frequency and amount will depend on the company’s performance. If you hold a Security to its Ex-dividend date, you will be entitled to the cash dividends after Payment date.

Bonus Issue

A Bonus Issue is an issuance of bonus shares by a company to entitled shareholders. If you hold a Security to its Ex-bonus date, you will be entitled to the bonus issue after Payment date.

Shares Consolidation

A Shares Consolidation, or a Reverse Stock Split, reduces the number of shares held by existing shareholders. The share price will increase proportionally. If you hold a Security to its effective date of consolidation, your positions and average traded price will be adjusted to reflect the consolidation. Adjustments for exchanges operating in the Asian time zone will be made after the close of trading, one trading day prior to effective date of consolidation. Adjustments for AMEX, NASDAQ and NYSE will be made before the commencement of trading on the effective date of consolidation.

Following a consolidation, if the adjustments have been made before the commencement of trading of the share, the “Unrealised P&L (Non-Leveraged)” indicator may reflect a reduced amount on the trading platform. This is a result of the mark to market of the adjusted average traded price against the pre-consolidation share price. This will not have an impact on the account balance as the unrealised Profit and Loss (P&L) for Securities will not be added or removed from it.

Stock Split

A Stock Split increases the number of shares held by existing shareholders. The share price will be divided proportionally.

If you hold a Security to its effective date of the split, your positions and average traded price will be adjusted to reflect the split. Adjustments for exchanges operating in the Asian time zone will be made after the close of trading, one trading day prior to effective date of the split. Adjustments for AMEX, NASDAQ and NYSE will be made before the commencement of trading on effective date of the split. Following a split, after adjustments have been made but before the commencement of trading of the share, the “Unrealised P&L (Non-Leveraged)” indicator may reflect an inflated amount on the trading platform. This is a result of the mark to market of the adjusted average traded price against the pre-consolidation share price. This will not have an impact on the account balance as the unrealised P&L for Securities will not be added or removed from it.

Rights Issue

A Rights Issue is an offering to existing shareholders by a company to purchase additional shares/warrants in proportion to their existing holdings, usually at a subscription price which is discounted relative to the current market price.

If the rights are renounceable, they may be tradable for a short period of time.

Shareholders will be allowed to exercise the rights. Rights that are unexercised by the deadline stipulated by us, shall be deemed to have lapsed.

Phillip Capital Sdn. Bhd. reserves the right to enable trading of renounceable rights.

Please see the examples below to understand how profit and loss for stocks contracts are calculated.

Profit Illustration

Loss Illustration

Trade orders can be placed using the following methods:

1. Self-execution via our trading platform
2. Call-in service: Phillip Capital Dealing Desk at 03-2783 0288.