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This Is What the SGX and NASDAQ Collaboration Means To Singapore Stock Investors

Neha Gupta

Singapore Exchange and NASDAQ have a signed a collaborative agreement that will make it easy for companies to list on both bourses, at the same time. The agreement will also make it easy for investors in Singapore to buy foreign stocks as a way of diversifying their portfolio.


NASDAQ-SGX Collaborative Agreement

The collaborative agreement between the NASDAQ and the SGX will ultimately increase Singapore companies’ access to capital market funding, thereby enhancing their corporate profiles on the global scene.

The two bourses are currently exploring the demand among corporates for a concurrent and sequential listing. There are also plans to bring the NASDAQ’s International Designation program to existing SGX-listed companies that wish to tap the U.S investor base. The two are also in discussions about the possibility of engaging in cross-marketing activities in the U.S and in Asia.

“Fast-growing Asian companies looking to tap the capital markets can choose to list on SGX on Asian home ground, and embark on a listing on NASDAQ as they expand their business globally,” SGX CEO Loh Boon Chye said in a statement.

The advantages of investing in foreign stocks are many. For instance, investors investing in Singapore stocks will now be able to gain access to a wide choice of U.S listed stock that pay decent yields. Investors in the U.S will also be able to gain access to stocks in emerging markets listed in the SGX.

Dual Class Share Stand-Off

Singapore Exchange has started to explore the feasibility of streaming the listing process of both exchanges to create a more efficient pathway for companies looking to list in both bourses. However, the exchange may have to make changes to dual-class share structures if companies from the U.S are to list in the exchange.

Dual Class share structures that allow companies founders to retain control even after selling a majority stake are currently only allowed for secondary listings in Singapore, where the companies are primary listed in developed markets. These structures are popular among technology startups, and are seen as one of the reasons Asian tech companies opt to list in the U.S rather than in Asia market exchanges. Sea Ltd formerly known as a Garena is one of the Singapore companies that has opted to list in the U.S in an IPO that could raise as much as $800 million.


Benefits of foreign stocks investment

Source: Shutterstocki

Investing in foreign stocks comes with its fair share of risks but so are the advantages for investors looking to diversify their portfolio and gain access to more liquid markets. The NASDAQ, for instance, is valued at more than US$6.8 trillion featuring some of the biggest companies that any investors in Singapore would wish to gain exposure to. The SGX, on the other hand, is valued at about US$1.2 trillion.

To be able to invest in foreign stocks while in Singapore, one will have to open a stock trading account with a brokerage firm like UOB Kay Hian, DBS Vickers or iFast. Most brokers regulated by the Monetary Authority of Singapore offer investments in overseas exchanges such as the U.S, Malaysia, and Hong Kong

To be able to trade the U.S market you will need to fill a W8-BEN form that is usually downloadable from the broker’s websites. Ones an account is set up with a local broker, choosing a stock is usually the next step and then opening a trade depending on the amount one wishes to invest.

Fees always come in handy when it comes to trading stock for both local listed and foreign companies. Some of these charges include brokerage commission charges, foreign goods and service tax (GST) as well as clearing fees.

Here are some fees to take note of:

  • Custodian Fees
    Once you buy the stock, you will also have to bear additional fees for holding foreign stocks. Most brokers usually charge S$2 per counter per quarter. If you buy three U.S stocks such as Google, Microsoft, and Apple, you will have to pay S$6.42 every three months you hold the stock.
  • Commission Charges
    A trader should always consider a broker that charges the lowest amount of commission fees to ensure optimum gross profits once a trade is closed.
    Asia based brokerage firms tend to charge higher commissions compared to U.S brokers. For instance, DBS Vickers charges a commission of $25 for every $5,000 trade that an investor opens. TD Trade Ameritrade charges a flat fee of US$ 10.65 for every $5000 trade openedA trader should always consider a broker that charges the lowest amount of commission fees to ensure optimum gross profits once a trade is closed.
  • Lot Sizes
    One of the biggest advantages of trading foreign stock is that it allows one take a position in a multi-billion company at a few hundred dollars. For most stocks listed on the NASDAQ among other exchanges, there is no board lot size, an advantage that allows one to trade a minimum of 1 share per order. In contrast, one has to buy a minimum of 100 shares for most stocks listed in the SGX.
Stock Broker Commission Fees Trading Fees Cash Upfront
<50,000 $50000-$100,000 >100,000 Minimum Fees Trading Fees
CIMB Securities $25 0.275% 0.22% 0.18% S$18 0.18%
DBS Vickers $25 0.28% 0.22% 0.18% S$10 0.12%
KGI Securities $25 0.275% 0.22% 0.18% S$25 0.18%
Maybank Kim Eng $25 0.275% 0.22% 0.18% S$10 0.18%
Philip Securities $25 0.28% 0.22% 0.18% S$25 0.18%
SAXO Capital Markets 15 0.12% 0.12% 0.12%
UOB Kay Hian $25 0.275% 0.22% 0.20% S$10 0.12%



Key Takeaways

Stock brokerage accounts that hold shares as a custodian are usually the cheapest and the best.

Cash upfront accounts are also worth looking at depending on the amount that one wishes to invest. Cash upfront accounts require one to deposit cash upfront into an account before one is able to buy a stock.

An investor should also consider a broker that provides an online trading platform with real-time charts. The platform should also be user-friendly with all the required tools and indicators needed to analyse a market.



This article “This Is What SGX and NASDAQ Collaboration Means To Singapore Stock Investors” first appeared on ZUUOnline.Sg.


(By Neha Gupta)

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