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Updates

Boom Securities expands Japan markets and other Hong Kong stock broker updates

There are a few additions and updates to the stock broker directory for Hong Kong international stock brokers. Perhaps most notably, the purchase of Boom Securities by Japan’s Monex Group has led to some expansion of its Japanese markets offering. As well as the Tokyo stock exchange, it now offers Osaka and the three smaller regional ones: Nagoya, Sapporo and Fukuoka.

New additions to the directory include BOCI Securities (BOCI Online), KGI and HSBC Hong Kong. These three firms are unlikely to offer much that isn’t already available for most international investors, but have been added to try to make the directory more comprehensive. There are a few other firms that should be added in the near future.

BOCI Securities states that “commission rate will be determined and agreed between customer & BOCI Securities”, which isn’t terribly helpful in giving an idea of how expensive it might be. Any investors who have used it and can give an idea of what typical rates are is welcome to leave a comment below or send an email via the contact form.

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Updates

Standard Chartered Bank Securities Trading and other Singapore stock broker updates

There are a number of new additions and updates to the international stock broker directory. One interesting one is Standard Chartered Bank Securities Trading, which moved into the Singapore brokerage market a few months ago with an unusual product.

It offers online trading in Singapore stocks for 0.2% per trade (0.18% for those with a larger banking relationship) and 0.25% per trade (0.2% for favoured customers) for Australia, France, Germany, Hong Kong, Japan (including both the Tokyo and Osaka stock exchanges), the Netherlands, Switzerland, the UK and the USA. This has no minimum commission, which is rare in the brokerage business and attractive to customers trading smaller amounts.

There are also apparently no account and no inactivity fees, custodian fees, no dividend collection fees, no corporate action charges, making it a commendably clean fee structure. There is one catch though; currency conversions done through Standard Chartered are considerably worse than many Singapore brokers, with users reporting a margin of 2% over the interbank rate. However, you can hold and fund foreign currency accounts with the bank, so you shouldn’t need to pay this every trade, if you’re careful.

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News

India opens up to foreign individuals – to an extent

Earlier this month, India announced details of its new system to allow foreign individual investors to invest directly in the local market – somewhat to my surprise, since when this proposal emerged in November, I though there was a big question mark over whether they would ever be implemented.

So what do the details look like? While the investors will be known as qualified foreign investors (QFIs), the restrictions to be qualified look less tough than we light had expected. Essentially it seems that they will need to be residents of a country that comply with standards on money laundering and are members of the Financial Action Task Force.

However, it was always too much to hope that such a bureaucratic government would allow unhindered access for foreigners to its markets. At first glance, the system is rather cumbersome and is unlikely to see a flood of foreigners into Indian shares.

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Investment

Is the S&P500 really 40% overvalued? – CAPE, equity q and intangible assets

Of all the tools we have for valuing the stock market, the cyclically adjusted price/earnings ratio (CAPE) and the equity q ratio are the most credible, with long histories and sound theory behind them. And right now, these suggest that the S&P500 is around 40% overvalued.

This isn’t quite as expensive as the market was in 2000, but it’s up there with other peak valuations over the past century. What’s more, stocks haven’t been consistently cheap for almost two decades, according to the same metrics. Even during the worst of the 2008-2009 panic, the market only briefly dipped below fair value.

That stands in sharp contrast to the usual stockbroker chatter that equities are cheap, but there’s no question which verdict investors should take more seriously. However, the degree and persistence of this overvaluation certainly raises some questions.

Few investors who look at CAPE and equity q seemed to have considered whether these measures could be giving us the wrong signals. But if you dig into the details, it seems very plausible that they could be making the S&P500 look more expensive than it is – although it’s still difficult to conclude that US stocks are cheap.

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FAQs

UK stockbroker accounts for non-residents

One regular question about the UK online stockbrokers list and UK international stockbrokers list is whether any UK stockbrokers will open accounts for non-residents.

Generally, many of the UK stockbrokers are not very helpful on this score, due to a combination of money laundering regulations and a tendency to regard overseas clients as a hassle. (The same problem is true for non-residents wanting to open an UK bank account.)

There are a handful of UK stockbrokers that indicate they will deal with non-residents, but investors report different levels of success opening and using accounts. It may depend on whether you are a UK citizen but non-resident, whether you are neither a citizen nor a resident, whether you are resident in the European Union (EU) or European Economic Area (EEA), whether you have a UK bank account and even who you speak to at the company.

The following firms have been reported to open online trading accounts for at least some non-residents and are probably worth investigating first:

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Updates

Small updates to UK stock broker details

There are a handful of small updates to some of the UK stock brokers in the stock broker directory and comparison tables, few of which have much impact on international investing.

1) Interactive Investor has now launched its own share dealing service (previously it was a white label of Halifax Share Dealing). The stock broker directory and comparison tables have been updated where relevant, but the company has not yet been given its own entry because this provider is of very limited interest from an international investing perspective and seems to be experiencing some severe teething problems with the new Interactive Investor service.

If it introduces any major improvements to the service – there is some talk of more countries being added – this will change.

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Investment

Is tech an investment – or always a trade?

As an investor, you either “get” tech or you don’t. Either it’s a source of glamour and outsized potential returns or hype and eventual disappointment. There doesn’t seem to be much middle ground.

Taiwan’s HTC is presently doing its best to satisfy both schools of thought. Shares in the smartphone maker staged a classic tech takeoff in 2010 – and have spent the second half of 2011 crashing back to earth.

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Investment

Is gold really a good inflation hedge?

On most measures, gold is a spectacularly useless investment. It doesn’t pay dividends or interest. It doesn’t generate any cashflow. Quite the opposite: it even costs you money to store.

The most common justification for investing in gold despite this is that it’s a hedge against inflation. But if you look at its record, that’s only partly true.

The chart below shows the subsequent one-year change in the US dollar gold price versus the one-year change in US CPI, calculated for every month since 1970. (The reason for beginning in 1970 is that the next year the Bretton Woods system of fixed exchange rates began to break down and currencies floated freely against each other and against gold. Before then, the dollar was pegged to gold, so the gold price didn’t change.)

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Investment

Is it time to invest in Vietnam (again)?

Vietnam has proved to be a terrible investment over the last four years. Widely seen as the “next Asian tiger” in the middle of the decade, an article in the FT today shows how attitudes have changed. Here’s a sample:

The government’s focus on breakneck growth at the expense of economic stability has led to growing inequality, soaring inflation, a lack of confidence in the currency and fears of a banking crisis.

Domestic overheating, coupled with the deterioration of the global economy, has forced many investors, foreign and Vietnamese, to revise their view of the country’s prospects. Deep-seated problems, such as corruption, poor education and infrastructure bottlenecks – all often overlooked by investors in the boom years – have moved into sharp focus.

And with inflation driving wages higher but labour skills not advancing as quickly, fresh questions are arising. Among them is whether Vietnam’s Communist party can force through painful reforms needed to ensure they avoid the “middle-income trap” ensnaring the likes of Malaysia and Thailand, whose economies are a source of cheap labour but not yet makers of higher-value products.

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News

India considers opening stock market to foreign individuals

Reuters is reporting that the Indian government is considering relaxing restrictions on foreign individuals investing in Indian shares, in an attempt to attract more foreign capital. If this goes ahead – and that’s a big ‘if’ – it could be a very exciting development.

Very few countries actively bar foreign individuals from investing in their stock markets, although some make it difficult. Oddly enough, it’s the BRICs – the four emerging markets that foreign investors talk about the most – that are the hardest. And India is arguably the most frustrating of all.

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