Let me help Cheeroy answer the easy ones.


'But wat's market capitalisation really means? According to Wikipedia, ur formula seems wrong?'

Market Capitalisation basically means how much the company is worth by public opinion. To get the value is to multiply the number of shares the company has in the market to the price per share.

For example : Take for example SHELL (stock code: 4234) in KLSE is currently priced at RM11 per share and SHELL has 300,000,000 shares outstanding.

The market capitalization of SHELL will therefore be;

RM11.00 * 300,000,000 shares = RM 3,300,000,000 or RM3.3 billion


This means the public thinks that SHELL as a company including it's assets and the ability to generate income is worth about RM3.3 billion.

A lot of things can affect the market capitalization, such as the public sentiment or feeling about the ability of the company to generate income. Let's say for example, there was an unfortunate accident in the SHELL refinery which is in Port Dickson. The refinery is not able to produce petrol anymore for 3 months. This would affect it's income as it cannot make its product to sell and generate profits. Because of this, the public sentiment will feel the SHELL share is not worth RM11 anymore and might not queue to buy the share at RM11 anymore. They calculate it is worth on RM7 now so they queue RM7 as buying price. This would be reflected in the market and show buy order at RM7.

RM7 * 300,000,000 = 2,100,000,000 or RM2.1 billion.

As you can see, the market capitalization has been reduced due to public sentiment about the ability of the company to generate revenue.

Share prices tend to be corrected lower when a dividend is issued. Remember the a share price reflects the ability to generate revenue as well as the current worth of the company assets like it's factory and cash in the bank. So if the company decides to give out dividend, the cash in their bank will lessen, and so the share price will reflect what the public will think the fair price per share will be after deducting the cash from it's bank.


'What influence share price? Why does it goes up and down? What is its determinant factors?'


The law of demand and supply or buyers and sellers are what determines how much a share price will be. The market is divided into buyers and sellers. If you ever been to a wet market during festive season, you can see the real market in action when the market vendor stocks start to dwindle due to frantic buying. Imagine everyone want to buy chicken for dinner, the vendor only got 100 chicken, and there is 200 people waiting in queue to buy. The price will increase because the vendor knows people wants to buy chicken from him. But if during the off peak season he has 100 chickens and only 50 people queue to buy, he needs to lower his prices to entice more buyers to buy his chicken which is cheaper.

The stock market is one big market with a lot of vendors and also a lot of buyers and everyone is competing with one another giving their best offers. There is no control like the government price control of chicken. If the stock is cheap, people will surely buy, if the stock is expensive, less people will buy. Try to read up on the law of supply and demand, that will make you understand all this chicken talk.

The answer to your first question is 'YES'. A counter's share price does not determine how BIG a company is, rather the market capitalisation does. Meaning the total shares a company has multiply by the share price will show how much the market value the company.

For example; Genting share at the moment is priced at RM7.40 and the company has 3.7 billion shares

So for Genting (3182) : 3,700,000,000 * RM 7.40 = RM 27,380,000,000 or RM27.38 billion Market Cap


Where as SHELL (4324) share is currently priced at RM11.30 and has 300 million shares

300,000,000 * RM11.30 = 3,390,000,000 or RM 3.39 billion Market Cap

From this calculation, you can clearly see that GENTING is a much bigger company compared to SHELL although SHELL share price is higher.


In terms of financial performance, you have to look at their past annual reports and see how much profit are they generating and the growth of their profits year by year.


For your example of Google being bigger than Yahoo, it is true, but do not look at that share price for that conclusion, rather look at their market capitalisation. Google has a market cap of USD 161.64 Bil where as Yahoo has a market cap of USD 39.02 bil.

This post has been edited by skiddtrader: Feb 11 2008, 06:09 PM

I've heard people playing the stock game at CIMB website before, but I've not personally tried it as it requires a registration.

Maybe you can try to register and see if it works.

CIMB iTrade

I believe you are talking about the liberalisation of the banking sector. It has already begun in 2007, with new banks like Al-Rahji entering the system and other foreign banks allowed to open a few more branches. It will be in steps though but I do not know the details.

Listing requirements in the Bursa website, I didn't bother to open it though.

Listing Requirements