Internal Factor Affecting Share Price of Stock

Chapter 1: Introduction

1.1 Background of the Study

1.1.1 Kuala Lumpur Stock Exchange (KLSE)

KLSE is the only stock exchange in Malaysia, governed by the Security Industry Act 1983 and supervised by the Security Commission. It started open exchanging of shares on 9 May 1960. (Financial System of Malaysia, 2014) With the secession of Singapore from Malaysia during year 1965, the common stock exchange continued to function but as the Stock Exchange of Malaysia and Singapore (SEMS).The KLSE is the legitimate and formal organization for securities exchanging Malaysia. Like any other stock trade, the KLSE is a local commercial center for investor and merchants to hold the trading activities of the shares, bonds and distinctive sorts of securities of organizations which are recorded on the trade center.

The main index for Bursa Malaysia is Kuala Lumpur Composite Index (KLCI). However, in June 2006, a new index series jointly developed by Bursa Malaysia and FTSE Group was introduced which is FTSE Bursa Malaysia Index. On November 7 of 2006, the index finally passed the 1,000 mark hurdle and closed at 1,003.28. It was partly boosted by the strong overnight close in the Wall Street. As of 31 December 2007, the Malaysia Exchange had 986 listed companies with a combined market capitalization of $325 billion. Besides, the type of trading system in KLSE is by an order-driven system. In an order-driven system, the prices are determined by the market forces. Buyers and sellers quote the bid and ask prices and prices are matched, in the case of KLSE, by its automated trading system.

In 1973, due to the termination of currency interchangeability between Malaysia and Singapore, the SEMS was separated into The Kuala Lumpur Stock Exchange Berhad (KLSEB) In Year 1975 which is a new company limited that by guarantee under company law, The KLSE took over the The Kuala Lumpur Stock Exchange Bhd (KLSEB) operation and in 1994 renamed as KLSE.

Like any other stock exchanges market...