Markets: Hong Kong

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Interactive Investor

Interactive Investor bought TD Direct Investing’s UK business in 2017, creating a service that combined TD’s international share dealing platform with II’s fund supermarket.

From an international investing perspective, the good points include decent coverage of North American, European and some Asian markets. The main downside is the commission on currency conversions of up to 1.5%, an often-overlooked charge that will eat into your returns if you trade frequently.

That said, unlike many UK stockbrokers, Interactive Investor offers multi-currency facilities, so clients should try to minimise the FX cost by making currency conversions as infrequently as possible. In addition, the firm will accept deposits in foreign currency, so you could consider using a low-cost foreign exchange transfer firm to pay in funds rather than exchanging currencies within the account.

AJ Bell Youinvest and Hargreaves Lansdown will probably be cheaper for long-term investors in shares, while Interactive Brokers or Saxo Markets offer better value for very active traders. However, Interactive Investor’s flat-fee structure makes it attractive for larger accounts that hold a mix of funds and shares

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AJ Bell Youinvest

AJ Bell Youinvest was a pioneer in low-cost online SIPPs before expanding to offer regular trading accounts and ISAs. The firm offers an extensive range of funds and bonds in addition to UK and international shares.

The online international dealing service covers foreign stocks that can be held through CREST, the UK’s settlement system and securities depository, which essentially means major North American and European stocks. Some non-CREST markets are also available for telephone dealing, including some of the major Asian markets. There is a minimum trade size of £10,000 for Asian markets, but no minimum size for phone orders in other markets.

International trades are done through market makers rather than directly on the overseas exchange – the same method used by Hargreaves Lansdown, which is probably its closest direct peer.

Trading commissions are relatively low, but FX charges are up to 1%. This remains lower than some rivals, but investors who will be trading in and out of foreign-currency positions frequently may prefer brokers that offer the ability to hold foreign currency balances to minimise currency conversions. Like Hargreaves Lansdown, a Youinvest SIPP will automatically receive US dividends with zero withholding tax deducted and Canadian dividends at a reduced tax rate (not all discount brokers are set up to do this).

Overall, Youinvest is one of the better UK brokers for international dealing, especially for long-term investment in foreign shares within an ISA or a small SIPP (with larger SIPPs, it may be worth paying higher fees for a provider that lets you hold foreign currencies). Feedback on customer service is good.

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Charles Schwab Global Account

Charles Schwab’s online global trading service is distinct from the international dealing option in its Schwab One Account and, unlike the latter, is only open to US citizens (US residents who don’t hold US nationality will apparently not be eligible). It offers online trading for 12 markets in Europe and Asia – some publicity material claims access to 30 countries, but this larger number refers to trading in foreign ADRs and OTC stocks, which is not the same as having direct access to an overseas exchange.

Fees are more competitive than the Schwab One telephone dealing offering. However, be aware of the currency conversion commissions (up to 1% over interbank rates) and also the 0.1% extra commission that Schwab’s local broker will add on – detailed rates are in Schwab’s fee guide [PDF]. On the plus side, this account has no minimum balance, other than requiring clients to already have a Schwab One account.

Overall, this is more realistic for smaller investors than anything Schwab offered previously, but it is still more expensive than Interactive Brokers and covers less markets than the similarly priced Fidelity.

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Core Pacific – Yamaichi

This Hong Kong brokerage was originally founded in the early 1990s by Taiwan’s Core Pacific Group, now best known internationally for being behind one of the world’s oddest looking shopping malls. It subsequently acquired the Hong Kong operations of Yamaichi Securities – formerly one of the Japanese ‘big four’ brokers – when the latter went bankrupt in 1997, merged with the Hong Kong arm of Taiwan’s Yuanta Securities in 1999 and then got caught up in a lengthy court battle when Core Pacific and Yuanta fell out.

Today, the firm offers trading in most Asian markets and a few others outside the region. However, fees are high and it looks like most investors can get a better deal elsewhere. It’s included in the directory to help with comparisons, but there is no customer feedback available so far.

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BOCI Securities

The international securities arm of Bank of China seems to be a fairly popular choice for online trading of Hong Kong stocks, but I haven’t had any feedback from users who’ve used the fairly extensive list of foreign markets it claims to deal by telephone.

Its website gives absolutely no indication of commission levels, simply saying “Commission rate will be determined and agreed between customer & BOCI Securities”. Some details of custody and other fees are given, but may be unreliable – the claimed custody fees for Malaysia and Thailand are incomprehensibly high.

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KGI Securities

The Hong Kong division of Taiwanese financial services group KGI offers a handful of markets for online trading, while a substantial number of others are available for trading by telephone.

Rates for most are generally not especially competitive by international standards, especially given the high minimum fees (typically US$150 per trade).

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HSBC Hong Kong

The default stock broking service offered by HSBC in Hong Kong covers online trading in local and US equities and a small number of other major global markets by phone. Rates for international stocks are not competitive withe best best international brokers operating in Hong Kong. Details below are based on this service.

The group also has a local securities operation that offers a wider range of markets. This is clearly aimed at wealthy clients, but firm does not provide much information on minimum account sizes and fees – it may be worth investigating for investors with larger accounts.  If you’ve used this service and can provide some more information on terms and costs, feel free to send some feedback via the contact form.

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CIMB Securities Singapore iTrade

Malaysian banking group CIMB bought the stockbroking division of Singapore’s GK Goh in 2005 and more recently has been expanding its international trading service. The iTrade CIMB @SG service now offers online trading in six markets at relatively competitive rates.

However, international investors should note the firm apparently demands that non residents of Singapore use a CDP Sub-Account with an quarterly maintenance fee of S$20 to hold their Singapore shares. Most other Singapore stock brokers will get non residents to open a personal CDP account, which carries no charges, so it’s hard to understand why CIMB chooses to impose an unnecessary extra cost.

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DMG & Partners

A joint venture between Deutsche Bank and Malaysian financial services group OSK, DMG & Partners offers online trading in Singapore and three overseas markets: Malaysia, Hong Kong and the USA. Rates for these markets are competitive with most of the other Singapore stock brokers, but many of those other brokers offer a wider range of other markets as well, giving you greater flexibility.

Applications from non-residents are apparently accepted, but for international investors a provider such as OCBC Securities or Phillip Securities is probably a more useful choice in Singapore.

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Citibank Singapore Brokerage

The Singapore division of this multinational bank offers online trading for Singapore, the USA and now Hong Kong. The S$18 minimum commission for Singapore trades was previously the lowest available, but has now been beaten by Standard Chartered’s offer of no minimum commission. Rates for the USA are high given that it’s Citibank’s home market.

Applications from non-residents will apparently not be accepted, but the service would be unlikely to interest many international investors in any case.