If you are an Australian investor, the process of purchasing international securities can often be difficult and expensive. This is due to the nature of Australian stock brokers – many Australian investors will typically use their domestic stock broker to gain access to international markets, where the “Big 4” banks make up over 70% of total market share for international trading. However, relying on these brokers may be problematic as investors must bear higher costs of entry than in the domestic market, thus limiting their investment opportunities and amplifying a home country investment bias. In this piece we will break down the cost of trading international securities for Australian investors, with a specific focus on Asian share markets.
Table 1 – Brokerage comparison across the Big 4 banks and Monex (Footnote #1)
|United States||USD 9.99 / 0.10%||USD 19.95 / 0.31%||AUD 59.00 / 0.59%||AUD 14.95 / 0.11%||USD 19.95 / 0.31%|
|Australia||AUD 21.95 / 0.132%||AUD 10.00 / 0.31%||AUD 19.95 / 0.11%||AUD 14.95 / 0.11%||AUD 19.95 / 0.11%|
|Japan||JPY 2,500 / 0.10%||USD 39.95 / 0.40%||n/a||n/a||USD 57.95 / 0.65%|
|Hong Kong||USD 12.00 / 0.10%||USD 39.95 / 0.40%||AUD 59.00 / 0.59%||AUD 14.95 / 0.11%||USD 57.95 / 0.65%|
|Indonesia||IDR 350,000 / 0.30%||USD 39.95 / 0.40%||n/a||n/a||USD 115.00 / 0.90%|
|Philippines||PHP 1,000 / 0.30%||USD 39.95 / 0.40%||n/a||n/a||USD 115.00 / 0.90%|
|Singapore||SGD 35 / 0.30%||USD 39.95 / 0.40%||AUD 59.00 / 0.59%||n/a||USD 115.00 / 0.90%|
|Thailand||THB 800 / 0.30%||USD 39.95 / 0.40%||n/a||n/a||USD 115.00 / 0.90%|
|Shanghai (HK Connect)||RMB 130 / 0.30%||n/a||n/a||n/a||n/a|
|Shenzhen (HK Connect)||RMB 130 / 0.30%||n/a||n/a||n/a||n/a|
|China B (Shanghai)||USD 18.00 / 0.30%||n/a||n/a||n/a||n/a|
|China B (Shenzhen)||HKD 130 / 0.30%||n/a||n/a||n/a||n/a|
|Taiwan||NTD 800 / 0.30%||n/a||n/a||n/a||n/a|
|Korea||KRW 25,000 / 0.30%||n/a||n/a||n/a||n/a|
|Malaysia||MYR 100 / 0.30%||n/a||n/a||n/a||n/a|
The table above shows the current landscape between Australia’s largest brokers, with a focus on Asian markets. If we compare brokerage prices alone, Monex stands out as a clear performer for value. For example, if you were looking to enter the US market by purchasing shares in social media giant Facebook (NASDAQ: FB), the average brokerage fee across the Big 4 for a minimum share parcel would be just under USD $30.00 – this is almost triple the cost of Monex for the same parcel of shares!
Additionally, when looking at the markets available to invest in – it is often difficult to find access to developing Asian markets such as China and Malaysia for example. Developing economies in the past are known to produce potentially great companies for investment, because as the economy grows and shifts to a more developed landscape the stock market evolves with it – China is a great example of this. Furthermore, if you are looking to diversify your portfolio into more prominent markets such as Hong Kong and Singapore for example, paying significantly higher brokerage fees than necessary may erode your potential gains. High fees should not be a reason for not diversifying your portfolio into a company or market which you see potential in, and over time these brokerage fees will add up and you may realize you could have saved a lot of money if you were with the right broker!
Australians are known to be keen investors but often find themselves restricted to the mining and financial services sectors which dominate the ASX. This is due to various factors, such as the familiarity of the domestic market, tax benefits that come along with investing in Australia and, to a large extent, the high costs that have previously been associated with investing internationally. As a result, the “Home Country Bias” has been exaggerated in the investment trends of Australians to the extent that over 66% of Australian investors are invested only in the Australian market. This creates potential diversification issues, as the Australian market as a whole makes up less than 3% of the global market cap. (Footnote #2)
Our mission at Monex is to change this view, and empower Australians to find greater investment opportunities and diversify their portfolios, all at a fair price. With Monex, you are able to find access to over 50,000 listed securities across 12 Markets, which can all be managed by one account on the same platform. To Find out more, contact our client service team on (02) 9103 9600 or email@example.com
1. Brokerage rates listed include the range (min-max) of placing an online order with each respective broker. GST included for Monex commission (where applicable).
2. Vanguard research 2016
All information contained in the blogpost is factual. The prices listed above were taken from each respective broker’s website on the 15/01/2018. Brokerages rates may be altered at any time. This blog post is uses factual information only and is not intended as financial advice. Past performance is not an indicator of future performance.