Global Brokerage Accounts
Global Brokerage Accounts
It is becoming increasingly easier for an investor to open a brokerage account in other (foreign) markets. Around the world, both local banks and brokerage houses have been setting up the capability for on-line stock services to permit the buying and selling of stocks.
In the United States, American investors have watched enviously as many foreign bourses have significantly out-performed the U.S. indices. This trend has accelerated in 2007 as, to date, the Dow is up only 8%, the S&P 500 7%, the Nasdaq 6%, and the Russell 2000 5%. Meanwhile, Frankfurt is up 17%, Mexico 16%, Seoul 15%, Sydney 11%, and Paris 9%. The winner is Shanghai, up 56% year-to-date! No wonder Mr. Greenspan said such performance is “clearly unsustainable”.
Until recently, the only way U.S. investors were able to buy foreign stocks was via American Depositary Receipts (“ADRs”) that were quoted on a U.S. exchange. These tend to be, of course, the largest companies. Which denies the investor the opportunity to take advantage of the myriad of smaller-sized firms whose stock prices have, in may cases, significantly outperformed the bigger companies. The smaller companies also represent a purer play on the specific foreign economy.
Things have changed. Now, in Hong Kong, Boom Securities allows foreign investors trading access to every major market in Asia. In Cairo, EFG-Hermes provides on-line trading facilities, in English, in both Egypt and the United Arab Emirates. In Gibraltar, investorseurope provides investors with on-line access to many European markets.
The proliferation of internet services has made all of this possible. Since there are no regulatory rules on where a U.S. investor may open an account, only that income and capital gains be reported, increasing use of overseas accounts is opening up new investing opportunities (and commensurate risk).
Investing is fraught with risks, perhaps more so in foreign markets. There are currency risks, the likelihood of more government interference, less stringent accounting standards, and difficulty in getting timely and accurate information.
However, there is no denying that global brokerage activity is on the upswing. There are some U.S. firms that are focusing their efforts on expanding their clients’ access to foreign securities. E*TRADE Financial Corp., the parent of E*TRADE Canada, our distribution partner in Canada, intends to launch a new global-trading website later this year that will allow its U.S. clients to buy and sell stocks directly on six exchanges.
EverBank Financial Corp.’s EverTrade Direct Brokerage unit now offers telephone-based trading in approximately 20 markets for a flat US$50 per trade.
The increasing globalization of commerce and industry is now occurring in stock market trading. Caveat emptor.
It is becoming increasingly easier for an investor to open a brokerage account in other (foreign) markets. Around the world, both local banks and brokerage houses have been setting up the capability for on-line stock services to permit the buying and selling of stocks.
In the United States, American investors have watched enviously as many foreign bourses have significantly out-performed the U.S. indices. This trend has accelerated in 2007 as, to date, the Dow is up only 8%, the S&P 500 7%, the Nasdaq 6%, and the Russell 2000 5%. Meanwhile, Frankfurt is up 17%, Mexico 16%, Seoul 15%, Sydney 11%, and Paris 9%. The winner is Shanghai, up 56% year-to-date! No wonder Mr. Greenspan said such performance is “clearly unsustainable”.
Until recently, the only way U.S. investors were able to buy foreign stocks was via American Depositary Receipts (“ADRs”) that were quoted on a U.S. exchange. These tend to be, of course, the largest companies. Which denies the investor the opportunity to take advantage of the myriad of smaller-sized firms whose stock prices have, in may cases, significantly outperformed the bigger companies. The smaller companies also represent a purer play on the specific foreign economy.
Things have changed. Now, in Hong Kong, Boom Securities allows foreign investors trading access to every major market in Asia. In Cairo, EFG-Hermes provides on-line trading facilities, in English, in both Egypt and the United Arab Emirates. In Gibraltar, investorseurope provides investors with on-line access to many European markets.
The proliferation of internet services has made all of this possible. Since there are no regulatory rules on where a U.S. investor may open an account, only that income and capital gains be reported, increasing use of overseas accounts is opening up new investing opportunities (and commensurate risk).
Investing is fraught with risks, perhaps more so in foreign markets. There are currency risks, the likelihood of more government interference, less stringent accounting standards, and difficulty in getting timely and accurate information.
However, there is no denying that global brokerage activity is on the upswing. There are some U.S. firms that are focusing their efforts on expanding their clients’ access to foreign securities. E*TRADE Financial Corp., the parent of E*TRADE Canada, our distribution partner in Canada, intends to launch a new global-trading website later this year that will allow its U.S. clients to buy and sell stocks directly on six exchanges.
EverBank Financial Corp.’s EverTrade Direct Brokerage unit now offers telephone-based trading in approximately 20 markets for a flat US$50 per trade.
The increasing globalization of commerce and industry is now occurring in stock market trading. Caveat emptor.
posted by Bob Weir at
5:10 PM
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