Tuesday, May 15, 2012

How Malaysians Can Own Shares In Facebook: A Step-By-Step Guide


The following is a guest post from Ching Lee, Founder of iMoney.my. iMoney helps Malaysians save money by providing a free, user-friendly online service so that Malaysians can compare a wide range of products in one place, and find the product most suited to their needs. Simply put, iMoney lets you compare all your options before you spend your money.

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Speculators across the world are wondering if the hype of Facebook's initial public offering (IPO) will be artificially driving up its price. In fact, according to Reuters, Facebook’s IPO is already oversubscribed, despite some concerns about slowing growth, high valuation and signs the company is having trouble increasing revenue from mobile advertising.

Below are a few recent quotes / comments by market experts on the topic:

“Most retail investors will be shut out of the offering and won't get the IPO price, meaning they likely will have to pay more in the days that follow if they want an early piece of the action.” – The Wall Street Journal

“The valuation can be justified only if investors assume that Facebook can continue its rapid growth.” - Gerard Hoberg, Associate Professor of Finance at the Robert H. Smith School of Business, University of Maryland.

“When the smoke clears, it is likely for Facebook to carry a $100 billion market capitalization over top of $1 billion in 2011 net income.”SeekingAlpha.com

Rumour has it the Facebook IPO will create more than 900 millionaires, mostly among Facebook’s early employees. It is no wonder that many casual investors have strong desires to buy a piece of the stock, just to own a part of the company they use so often.

Do Malaysians want to buy Facebook shares? After all, Malaysia is one of the most sociable countries on Facebook.

For those who are interested, the iMoney.my research team has put together a table that compares some of Malaysia’s top brokers. With more than a dozen brokers in Malaysia, it is often a colossus task finding and identifying the right broker. iMoney’s research is primarily focused on costs (how to avoid being charged unnecessary fees) and ease of use (how can Malaysians effortlessly own Facebook shares), and below are some of their top recommendations:

Broker
Fees And Charges
Ease Of Use
Maybank
Brokerage: 0.4% (minimum of USD25)

Total fee assuming a RM10,000 investment: RM75

Pros:
- Multiple Bank Branches For Account Set Up (Store Locator)
- Online Application (For Existing Maybank Customers)
- Online Trading Access
- Phone Assistance

Cons: n.a.
CIMB iTrade
Brokerage: 0.4% (minimum of USD25)
Contract Stamp: 0.1%
Bank Charges: RM20 (buy only)

Total fee assuming a RM10,000 investment: RM105
Pros:
- Multiple Branches For Account Set Up (Store Locator)
- Downloadable Application Forms
- Online Trading Access
- Phone Assistance

Cons: n.a.
OSK188
- Brokerage: 0.1% (min of USD25) based on USD value + 0.3% (min of RM28) based on RM value
- Stamp Duty: 0.1%

Total fee assuming a RM10,000 investment: RM115
Pros:
- Online Trading Access
- Phone Assistance

Cons:

Alliance
- Brokerage: 0.15% (min of USD20) based on USD value + 0.6% based on RM value
- Contract Stamp: 0.1%

Total fee assuming a RM10,000 investment: RM130
Pros:
- Online Trading Access
- Phone Assistance

Cons:


**We assumed a USD/MYR exchange rate of USD1 = RM3

So how do you actually get a piece of Facebook share?

A STEP-BY-STEP GUIDE TO BUY FACEBOOK SHARES


Before you can purchase any Facebook shares (or any overseas shares for that matter), there are generally a few things you need to do:

1) Open A Foreign Shares Security Trading Account With A Broker. 


To do this, you will need to bring along

·      a copy of your NRIC,
·      a recent bank statement, and
·      an account opening fee (usually around RM10 to RM30)

to the nearest branch of your preferred broker. Some brokers (e.g. CIMB) have downloadable forms online that you can complete prior to visiting the branch in order to reduce your wait time. Maybank allows you to complete the application online if you’re an existing customer.            

2) Register For An Online Trading Account


This is an additional step if you would like to buy your Facebook shares online (i.e. not through phone transactions). Most brokers would offer to register an online trading account for you while you set up your security account at the branch, however, you must explicitly request for this.

3) Log-On and Find the NASDAQ Stock Market


Like most technology-related companies, Facebook will be listed on the US NASDAQ share market. To find Facebook shares, you will need to look under the stock code “FB”.

4) Purchase Facebook Shares


Based on a number of market commentaries, Facebook is expected to see its shares sold between USD28 to USD35 (or around RM84 to RM105) upon listing. Depending on your broker, you may be able to purchase shares in lot sizes of 100 or less.

It would generally take 3 working days from the time you transact to the time you actually own the shares (commonly known as a settlement period of T+3).

NEED HELP?

Need to speak to a remisier? Email iMoney your name and preferred mode of contact at hello@imoney.my, and we'll get back to you with a list of remisiers you can call to get direct advice.

Need more comparisons? Want to know our personal recommendations? Sign up for the iMoney.my "Money Saving" Newsletter at our website: www.iMoney.my

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iMoney.my is a new and exciting price comparison website in Malaysia. We help Malaysians compare all their options before spending their money.

Disclaimer: We're not trying to hype up any stock and we're not involved with Facebook (although we wish we were), and investing money always involves the possibility of losing it, so please consult your financial advisor before investing!