Almost every countries have stock exchange setup. So which Market should we choose? Below are few keys i used:
- Various Fees & Tax
- Familiarity on the country
- Market Natures & maturity
Various Fees and Tax:
Depend on the country you reside, cross country purchasing share will definitely expansive than buy share locally.(lets ignore broker different here). Example, if in Malaysia I wish to purchase foreign share using local investment bank will cost me around 20-40 usd per transaction. Anyway, this not a big deal for me, as I not really making transaction so frequently. Also, this can be overcome by finding a broker with lower fees.
The real impact is Withholding Tax for Dividend Counter. Country like US will impose a 30% Tax on Dividend that going to paid to Foreign Investor. This 30% is really a big deal for those who plan to build Dividend Portfolio. Imagine a counter declare 7% DY, you can only get 4% after deduct withholding tax and processing fees. This is also one of the reasons why all my US stock holding are more on growth company instead of dividend play. My dividend play is mostly local stock.
Familiarity on the country
How well you know about the country? Politic situation, economy status, financial blueprint and etc? Each of this factor will influence the performance of the counter you choose to buy. Example if you going to buy GLC counter, then you have to know the politic situation. (Well, personally I not encourage to purchase GLC counter).
Another example is which level of 5G adaptability the country currently at, if the country just about to start on that, we can just screen out all 5G infrastructure related counter into out watchlist.
Market Natures & maturity
Currently I believe US have the most mature Stock Exchange capability in the world. You can invest on Warrant, Option, Commodity, Futures, Stock, various ETF there. They have more investor, higher Volume/transaction and also support to purchase online.Depend on what you want/need, you can choose different market for the product. Example Malaysia not really able to perfroms short selling (only limited counter and by buying Put Warrant).Also, sometime the counter that you would like to buy are not listed in your local country but listed in other Stock Exchange market.
What is my investment strategy in various market.
The key is to Diversify. I try to deploy my fund to various country to lower the risk. Below are how I plan :
- For US portfolio mostly are Growth Stock or Counter with Strong IP. As dividend play will imposed 30% tax and most of the Strong Business Moat Company listed in US.
- For Hong Kong is for me to purchase China listed company as HKEX nearer to China and lesser politic impact especially when Trade War between US and China are escalating.
- For MY and SG, most of my fund will reside here because I am more familiar with what happen around here, for some counter, I can even do a "Touch the Brick" research.