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That’s one of the most common questions I hear and one that shows how intimidated many U.S. investors are by investing in foreign stocks. What’s sad is that it is easy, simple, and inexpensive to invest in foreign stocks.
A NEW service from Fidelity makes foreign investing even easier.
But first, let me tell you that you don’t necessarily have to invest in a foreign stock exchange to buy foreign stocks. I say that because THOUSANDS of foreign stocks are listed on the New York Stock Exchange and the Nasdaq.
Big companies that you’ve known for years, such as Toyota (TM) of Japan; Nokia (NOK) of Finland; Michelin (MGDDY) of France; Siemens (SI) of Germany; LG Phillips (LGL) of South Korea; and British Petroleum (BP) of Great Britain are available.
And not just mature, established foreign markets either. FACT: Did you know that there are more than 100 Chinese stocks listed on U.S. exchanges? Huge, multi-billion-dollar companies, such as China Mobile (CHL), CNOOC (CEO), China Life (LFC), PetroChina (PTR) … and many more.
As you can see, it is easy to invest all over the world with your current broker. However, as nice as it is to have all those U.S.-listed foreign stocks available, many of the best foreign stocks are traded on their home markets.
If you really want to hit some investment home runs, you need a broker who has an international trading platform. As I said above, a NEW service from Fidelity is going to make that easier for millions of American investors.
Maybe you’ve seen the new Fidelity commercials on TV, but here are the details. Fidelity Investments is expanding its online-brokerage services to allow investors to trade foreign stocks and foreign currencies in 12 markets and eight currencies.
Those countries are Australia, Belgium, Canada, France, Germany, Hong Kong, Italy, Japan, Netherlands, Norway, Portugal and the United Kingdom.
Access to the Hong Kong exchange is particularly important because it is the trading portal to China.
Fidelity gives investors the option to price their investment in either U.S. dollars or the local currencies. The trading commissions, which can be as low as $30, are paid in local currencies.
Fidelity is even going to offer some of its vaunted research on foreign companies as well as company-specific news and real-time foreign quotes.
Fidelity knows its way around the investment block, and this new international trading service is part of an increasing emphasis on international investing.
Fidelity recently raised the allocation of international stocks in its target-date funds to 20-30% (depending on the fund) as well as increasing the weighting of international stocks in its model portfolio to 30%.
The reason is very simple because 80% of the world’s best-performing stocks over the last decade were non-U.S. stocks. I expect that trend to continue for a long time.
This new service is available for active traders who have a minimum $25,000 account. Here’s a link to a YouTube video that explains the service. It’s a little dry but very informative: http://www.youtube.com/watch?v=nkNGXxCPx78
Fidelity isn’t the only U.S. discount broker that offers international trading, though. E-Trade has offered international trading for six markets — Canada, France, Germany, Hong Kong, Japan, and the United Kingdom — since 2007.
E-Trade charges approximately $21.95 per international trade and another $20 as a currency exchange fee.
The biggest shortcoming to both E-Trade and Fidelity is that they don’t have trading to all of the exciting Asia markets, such as Indonesia.
As I wrote last week, I just came back from a five-day trip to Indonesia, and I was blown away by the economic growth I saw. Indonesia has the fourth-largest population in the world and is growing by leaps and bounds. It just reported that its economy grew by 4.2% in the third quarter; that’s on top of 4% in Q2. That makes it the THIRD-fastest growing economy in Asia, just behind India and China.
Indonesia is rich in natural resources, especially oil and coal. How rich? Many people don’t realize that Indonesia was the only Asian member of OPEC until it voluntarily withdrew last year. The country withdrew because its economy was growing so fast and that it was making such good use of its own oil, it didn’t need to export it any more.
Neither E-Trade nor Fidelity can handle Indonesia trades, so to invest there, you should take a look at companies like Euro Pacific Capital (www.europac.net) or Boom Securities (www.boom.com).
Boom Securities, based in Hong Kong, offers trading in Hong Kong, Japan, Australia, Indonesia, Korea, Malaysia, Philippines, Shanghai B, Shenzhen B, Singapore, Taiwan, and Thailand.
International investing has never been easier … or more lucrative. Get on board!
Regards,
Tony
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Uncommon Wisdom (UWD) is published by Weiss Research, Inc. and written by Sean Brodrick, Larry Edelson, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in UWD, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in UWD are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amy Carlino, Selene Ceballo, Amber Dakar, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.
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