A Guide To Buying Stocks In Brunei

Investing in stocks is a way to generate wealth. You can make money through capital gains when stocks are worth more, or through dividends over time. Stocks are considered an investment vehicle, and if you own stock in a company, you own a part of that company and are entitled to a percentage of its profits. Stocks can be bought directly from a company or traded publicly on a stock exchange.

In Brunei, there are two main ways to purchase stocks: through Baiduri Capital, or through brokerage accounts outside of Brunei. Baiduri Capital is a licensed entity wholly owned by Baiduri Bank and is the first to offer online securities trading in the Brunei market. Through its online trading portal, you can invest in major stock markets such as Singapore, Hong Kong, Malaysia, and the US. To get started with Baiduri Capital, you will need an account with either Baiduri Bank or Baiduri Finance, and a minimum deposit of BND1,000.

Another option is to open a BIBD Wakalah CA Trading Account, which can be used for the settlement of trades with BIBD Securities and the sale or income proceeds from your investments. BIBD Securities provides brokerage services for BIBD shares and Shariah-compliant stocks listed on Malaysia and Singapore stock markets. There is no initial deposit or minimum amount required for this account.

It is important to note that investing in stocks carries risks, and you may lose your money. It is recommended to do your research and understand the risks involved before investing.

How to open a trading account with Baiduri Capital

To open a trading account with Baiduri Capital, you must first have an account with either Baiduri Bank or Baiduri Finance. The types of accounts you can open include:

• Baiduri Bank Savings account
• Baiduri Bank Current account
• Baiduri Finance Multi-Tier Savings Account
• Baiduri Finance Multi-Rate Savings Account

Once you have one of these accounts, you can start your investing journey with Baiduri Capital. You can call or visit them during business hours for an obligation-free consultation.

Baiduri Capital's products require a minimum starting amount of BND1,000. You can view their Tariffs page to see the minimum amount for each product.

To open a trading account, you will need to contact Baiduri Capital during office hours to book an appointment. They will prepare the necessary documents for you to sign, and you will need to bring along the required documents.

After you have opened your Securities Trading account and made your initial deposit, you may start trading within 2 business days for the Asia Market and 3 business days for the US Market.

The benefits of ETFs

Exchange-traded funds (ETFs) have become an increasingly popular investment vehicle in recent years, with more than 8,500 ETFs worldwide and US$10 trillion in assets under management (AUM) as of 2021. As of September 2022, there were approximately 3,000 ETFs in the US with US$5.9 trillion in AUM. ETFs offer investors a range of benefits, including:

Trading Flexibility

ETFs are bought and sold during the day when the markets are open, offering continuous pricing throughout normal exchange hours. This allows investors to know within moments how much they paid to buy or received for selling shares. The intraday trading of ETFs makes it easy for investors to move money between specific asset classes, such as stocks, bonds, or commodities.

Portfolio Diversification and Risk Management

ETFs allow investors to gain exposure to specific sectors, styles, industries, or countries, providing an easy way to diversify their portfolios and manage risk. ETFs are now traded on almost every major asset class, commodity, and currency globally. Additionally, innovative ETF structures can embody a particular investment or trading strategy, such as investing in stock market volatility or the highest-yielding currencies.

Lower Costs

ETFs generally have lower operating costs compared to traditional open-end mutual funds. This is because client service-related expenses are passed on to brokerage firms that hold the exchange-traded securities in customer accounts. Additionally, ETFs do not charge a 12b-1 fee, an annual marketing fee.

Tax Efficiency

ETFs are more tax-efficient than mutual funds due to structural differences. Mutual funds typically incur more capital gains taxes than ETFs, and these taxes are passed on to investors throughout the investment's life. In contrast, capital gains taxes on ETFs are only incurred when the investor sells the ETF. ETFs also avoid mutual fund redemption fees, further enhancing their tax efficiency.

Transparency

ETFs offer better transparency into their holdings than mutual funds. Mutual funds are required to disclose their portfolios quarterly with a 30-day lag, whereas most ETFs disclose their full portfolios daily on public, free websites. This allows investors to verify their positions and ensure the ETF aligns with its prospectus and stated investment strategy.

Overall, ETFs provide investors with a flexible, cost-effective, and transparent way to gain exposure to various asset classes and investment strategies while offering potential tax benefits.

Understanding brokerage services

There are two main brokerage services in Brunei: Baiduri Capital and BIBD Securities.

Baiduri Capital is a licensed entity wholly owned by Baiduri Bank and is the first to offer Online Securities Trading in the Brunei market. It holds the Capital Markets Services License (CMSL) issued by the Brunei Darussalam Central Bank (BDCB) under the Securities Markets Order, 2013. With Baiduri Capital, you can trade on all stocks listed on seven exchanges: Bursa Malaysia, the Singapore Exchange, the Hong Kong Stock Exchange, NASDAQ, the New York Stock Exchange, NYSE MKT LLC (AMEX), and the Shanghai Stock Exchange-A VIA Shanghai – Hong Kong Stock Connect. To get started with Baiduri Capital, you will need to have an account with either Baiduri Bank or Baiduri Finance, and the minimum deposit to open a trading account is BND1,000.

BIBD Securities, on the other hand, provides brokerage services for BIBD share and Shariah-compliant stocks listed on the Malaysia and Singapore stock markets. To use their services, you must be a Brunei Citizen/Permanent Resident/Foreign Citizen with a valid work/student permit, be at least 18 years old, and have an account with BIBD. You can start by opening a BIBD Wakalah CA Trading Account at any BIBD branch, which has no initial deposit or minimum amount requirement.

Both Baiduri Capital and BIBD Securities charge fees and commissions for their services, so it is important to understand their fee structures before choosing a brokerage service. Additionally, it is worth noting that there may be other online brokerage platforms outside of Brunei that you can use, but be sure to research any hidden charges and consider the costs of transferring money between countries.

When choosing a brokerage service, it is important to understand your investment goals and risk tolerance. Both Baiduri Capital and BIBD Securities offer a range of investment options, so be sure to compare their offerings to find the best fit for your needs.

How to buy stocks as a beginner

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How to choose stocks

There are two main ways to analyse a stock: fundamental analysis and technical analysis.

If you like digging deep into what the company does, who the executives are, and how much they earned over the last five years, fundamental analysis is for you. Reading through a publicly traded company's financial statements and recent news will give you an insight into their stability and growth. This technique is employed by people who are looking to buy and hold for the long term. Usually, more established companies will also pay dividends—some every month, every quarter, or every year.

Don't like boring numbers and executive summaries? If you can handle looking at as many charts as there are companies, technical analysis may be the way forward. This technique involves looking at historical charts to determine if a stock price is likely to go up or down. Usually, technical analysis is employed by traders who are looking to buy low and sell high. Reading charts is quite subjective, and just because the chart tells you the price might go up, doesn't mean it will.

There are also two local platforms in Brunei that can be used to invest in stocks: Baiduri Capital and BIBD Securities. Baiduri Capital is an investment subdivision of the main retail Baiduri Bank. They offer various investment vehicles, from foreign currency to insurance, unit trust funds, stocks and shares, and exchanged-traded funds (ETFs). BIBD Securities provides brokerage services for BIBD shares and Shariah-compliant listings on Malaysia and Singapore stock markets.

Frequently asked questions