How to Trade Shares or Stocks in Bursa Malaysia

Occasionally Pro Trade Shares will pick up some interesting news from Bursa announcement. Here are a few of them which I thought you might benefit.

Bonus Shares Proposal

BP Plastics Holdings Bhd, listed in Bursa Main Board, has announced on 7 April 2008 a proposal to issue bonus shares to its existing shareholders. Existing shareholders will receive 1 new BP bonus shares for every existing 2 BP shares. The Ex-date has not been announced.

The price traded prior to the announcement was RM0.56 and rosed to RM0.62 today (up RM0.06). Good time to pick up the stocks.

Assuming the proposal is approved by the Board and assuming that the price at the Ex-date remains at RM0.62, the therotical after Ex-date price will be RM0.42. If you buy 2,000 shares at RM0.62 for a total of around RM1,240 (excludes transaction costs) and you sell after the Ex-date at RM0.42, and theoritically you shouldn’t loose any money. However, it has been shown that between the announcement date to Ex-date, the share’s price will go up. If investor managed to grab the stock early, immediately after the announcement, and if the stock’s price continue to go up before the Ex-date, investor will generally make a capital gain after the Ex-date.

Example:
Assume that a particular stocks is RM0.50 immediately after the announcement of bonus issues. The stock’s price climb slowly to RM0.70 just before the Ex-date. Also assume the bonus issue is 1 bonus shares for 2 existing shares. Therefore if you buy at RM0.50 x 2,000 shares for total (exclude transaction costs) of RM1,000. The theorical price after Ex-date is RM0.70×2 / 3 = RM0.46 and maintain until you received your bonus shares in your CDS account. If you sell the 3,000 shares at RM0.46, you will receive (minus transaction costs) total around RM1,380 (RM0.46 x 3,000). Theorically you should make a gain around RM380 (minus transaction costs).

The decisions is up to you. Trade Shares just report the news.

Suspension of Stocks

Bursa announced that a Second Board company, BTM Resources Bhd, shall be suspended on 15 April 2008 as did not meet the minimum requirement for listing. It is undercapitalised. A Second Board company must have minimum issued share capital of RM40million. BTM has only RM31.42million.

BTM’s price is RM0.245 as at 8 April 2008, down RM0.215 today. It was RM0.46 on 7 April 2008 before the announcement.

Direct Deal Done

There was a large direct business transaction today for Second Board listed company, A-Rank Bhd. 2million shares changed hand which represents 2.5% of the total shares issued by the company.

Is there a change of the major shareholders. We have to wait for their announcement later.