​Guide to shares: How to invest

man ipad charts

October 29, 2018 | 4 min. read

If you're thinking of investing in Singapore-listed shares, find out what you need to do before and after you invest, including doing your due diligence and monitoring your investments.

Key takeaways

  • Always do your due diligence before investing.
  • Find out more about the company and its performance by reading its annual reports, corporate announcements and other disclosures.
  • Monitor your investments and understand the corporate actions that the listed company intends to take and how these can affect you.

Investing in SGX-listed shares

You can invest in shares of a company seeking a listing on the Singapore Exchange (SGX) through its initial public offering (IPO).

You can also invest in shares of companies that are already listed on the SGX through a broker. On the SGX, shares are mostly traded in board lots of 100. If a share is priced at $1, you pay $100 to invest in one lot of shares (excluding transaction costs).

Note

Some investors use margin financing when trading shares. Leverage trading can be risky and can lead to unlimited losses depending on the positions taken.

See also: Guide to shares: What you need to know before you invest

Before you invest

With so many shares to choose from, it pays to do your due diligence. Take the time to do your research and shortlist companies that meet your criteria. To buy and sell shares, you will need a Central Depository (CDP) account and a trading account with a brokerage firm.

Find out more about the process.

Decide on which shares to invest in

Be clear about your investment objectives first, that is, whether you are building up capital or looking for income. Also, know how much risk you are prepared to take. Build an investment portfolio that is diversified to achieve your desired risk-return profile. Decide on how you want to allocate your capital. This will help you narrow down your search.

Investors may use fundamental analysis or technical analysis or a mixture of both when deciding which shares to invest in.

Before investing, make sure you are familiar with the company including its business operations, whether it has a steady growth outlook, the industry it is in, its financial performance, corporate governance, whether there are any weaknesses and other factors which could affect its performance and share price.

Note

Beware of investing in shares or any other investment product based on hot tips or rumours.

See also: Get started with investing

Do your due diligence

Want to participate in an IPO? Take time to read the prospectus carefully to understand the company including its business operations, vulnerabilities, financial performance, valuation and corporate governance.

Likewise, before investing in shares of a listed company, find out more about the listed company and its performance by reading its annual reports, corporate announcements and other disclosures.

The above-mentioned information can be found at:

Open a CDP and trading account

Before you can start trading, you will need two accounts:

  • Securities account with the Central Depository (CDP) - this holds all the shares you'll buy on SGX, and electronically records the transactions as they happen
  • Trading account with a stock brokerage - this allows you to trade shares in the stock market

Both these accounts have to be linked before you can start trading.

Fees and charges

You would need to pay brokerage commission to your broker. The commission is usually based on a percentage of the investment amount.

In addition to brokerage commissions and other charges imposed by brokers, there is a CDP clearing fee and SGX trading access fee. Please note that GST is payable on all fees.

After you invest

As a shareholder, you should:

  • Monitor your investments regularly
  • Take note of any corporate actions that the listed company intends to take and how these can affect you
  • Vote in resolutions seeking shareholders’ approval, either at a general meeting or by proxy

Monitor your shares

You can get live trading prices from the SGX website.

There are on-going disclosure requirements if the shares are listed on SGX. Under SGX Listing Rules, companies are required to announce all material information via SGXNET. Companies are also required to announce their full-year and interim financial results.

Your broker may also provide research and analysis on the shares you are interested in.

Do keep track of the company’s performance, its business and the performance of the industry it operates in. You can do this by:

  • Reading the news
  • Keeping up with the company’s announcements and other disclosures to the public, including interim financial statements, annual reports, shareholders’ circulars, or other documents

Track corporate actions

You should also keep track of corporate actions, such as bonus or rights issues and share buybacks. As a shareholder, you should find out how these corporate actions will affect you.

Visit the SGX website to find company announcements and circulars for any of the company's proposed corporate actions.

Note

Companies may request a trading halt or suspension when disseminating material information to the investors.

Attend general meetings and vote

As an ordinary shareholder, you have a right to attend and vote at general meetings on matters such as major acquisitions or disposals, or the appointment of directors.

A general meeting provides a forum for you to engage the company’s board or senior management, and voice your views on matters affecting the company.

Note

Your vote counts – cast your votes for resolutions seeking shareholders’ approval by voting in person at a general meeting or by proxy.

Concerns about an SGX-listed company

If you are a shareholder and have some concerns about the company’s compliance with SGX’s listing rules, or about possible market misconduct, you may wish to contact SGX.

SGX is the frontline regulator of listed companies and is required to administer a sound regulatory framework to maintain a fair, orderly and informed market.

Alternatively, you may wish to make your views known at the company’s Annual General Meeting.

Checklist

Key questions to ask before investing in shares

Consider the suitability of an investment in shares in light of your own circumstances. In particular, you should consider whether you:

  • Have sufficient knowledge and experience to make a meaningful evaluation of the merits and risks of investing in shares
  • Have access to, and knowledge of, appropriate analytical tools to evaluate the investment in the shares and how such investment will impact your overall investment portfolio
  • Have sufficient financial resources and liquidity to bear all the risks of investing in shares, including the risk of losing all or a substantial part of your investment
  • Are able to monitor or evaluate (either by yourselves or with the help of a financial adviser) changes in market, economic or other conditions that may affect the issuer or trading in the shares

Last updated on November 07, 2018