STOCK MARKET 101 – BASICS OF THE STOCK MARKET (Part 3 of 4)

Hi Friends

A few days ago, we looked at why stocks list in the first place through the IPO process. This week, we will delve into how stocks trade in the exchange. In case you have missed out our first 2 parts of our articles, you can access them here:

1) Part 1 of 4: http://www.investment-in-stocks.com/stock-market-101-basics-of-the-stock-market/

2) Part 2 of 4: http://www.investment-in-stocks.com/stock-market-101-basics-of-the-stock-market-part-2-of-4/

Before we actually dive into that, we need to understand that before anyone can buy a stock in the Singapore Exchange (SGX) or even participate in an IPO process, he/she has to open a The Central Depository (CDP) account. The CDP is a place where all the stocks you have bought in SGX are held at. To open a CDP account, you must be at least 18 years old and not be an un-discharged bankrupt. You can open an account either by visiting CDP office at SGX Centre 2 or you open the CDP account concurrently with your brokerage account at the designated broker offices as discussed below.

A brokerage account is basically an account that allows you to buy and sell shares, either through the internet or through the phone. One can open multiple brokerage accounts with different brokers. There is no limit to the number of brokerage accounts you open. The list of brokers can be found at http://www.sgx.com/wps/portal/sgxweb/home/mygateway/brokers. Different brokers charge different commissions for buy and sell. You have to enquire with your brokers on the various charges. For a quick comparison, you can visit http://www.investinpassiveincome.com/comparing-singapore-stock-brokerages-lowest-fees-no-minimum-fees-best-platform/ but it may not necessarily be the latest information.

You would need to bring along your relevant identification documents when opening the accounts. Opening of both CDP and brokerage accounts are free-of-charge.

Once your CDP and brokerage accounts have been open, you can start to buy/sell shares in SGX. Trading sessions in the Singapore Stock Exchange (SGX) occur daily from Mondays to Fridays between 9.00am – 5.00pm, with the exception of public holidays. Trading on the eves of Christmas, New Year and Chinese New Year will be from 9.00 a.m. to 12.30 p.m.

Shares are usually traded in board lots. Board Lot is the standard trading size in the local market which is 1,000 shares except for a few exceptions. So, 1 lot of Starhub, for example, might cost you around $4000 (as one share trades at around $4, at time of writing). I mentioned “except for a few exceptions”. The exceptions occur when trading size is less than 1,000 shares. This is termed as ‘Odd Lot’ which means non-standard numbers of shares.

Next, we will look at how to read the market data as shown in http://www.sgx.com. You need to know how to read this in order to buy shares.

Stock List

 Let’s go step-by-step on how to discern the dazzling information given above. We will use Medtecs as an example.

  • Counter Name – This is the name of the stock – Medtecs.
  • Cde – This is the ticker symbol of the stock. It’s just a code to identify the stock.
  • Last – The last traded price of the stock, which is $0.091. That means to buy 1 lot (or 1000 shares) of the company, we have to fork out $91 (it may seem extremely cheap in absolute terms but that is not how to decide whether to purchase a stock).
  • Chg – This means “Change”. It’s the change in price from the previous day’s closing price of $0.084 (not reflected in the table).
  • % – This is the percentage change in price from the previous day’s closing price.
  • Vol – This is the amount of shares traded so far. It is quoted in 1000s. So, the total shares traded was 129,629,000 shares.
  • BVol – This means “Buy Volume”. It is the total number of shares that the buyers are queuing to buy from the sellers. It is quoted in 1000s.
  • Buy – This is the price the buyer is willing to buy at.
  • Sell – This is the price the seller is willing to sell at.
  • SVol – This means “Sell Volume”. It is the total number of shares that the sellers are queuing to sell to the buyers. It is quoted in 1000s.
  • Open – This is the price the stock started trading at.
  • High – This is the highest price the stock hit so far for the day.
  • Low – This is the lowest price the stock hit so far for the day.
  • Value – This is the dollar amount of shares traded so far for the day.

That’s it for today! We look at why we need to invest in the next article!

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Cheers!

Research Team

Mind Kinesis Value Investing Academy

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