Question

Understand how international equity can be listed overseas, how investors can obtain international equity, implications to holding international equity, benefits and problems in global markets

Answer 1

1. Open an account with Indian Brokers with a tie-up with a foreign broker-

Many full-service Indian brokers (like ICICI direct, HDFC Sec, Kotak Sec, Reliance money, etc) has a tie-up with the foreign brokers. They have made it very simple to open your overseas trading account with their partner (foreign) brokers.

2. Open an account with the foreign brokers-

Few international brokerage firms like Interactive Brokers, TD Ameritrade, Charles Schwab International Account, etc permits Indian citizens to set up an account and trade in US stocks, mutual funds, etc. In fact, brokers like ‘Interactive brokers’ also has an office in India where you can visit, get your queries answered and open your overseas trading account.

3. Buying Indian MF/ETFs with global equities—

There are a number of mutual funds/ETFs who invests in international markets (global market, emerging market, etc). You can invest in those mutual funds/ETFs to indirectly invest in foreign equities. This is the easiest approach to invest in foreign stocks. An advantage of investing through mutual funds is that you won’t need to open any overseas trading account. Further, you won’t also require to invest a hefty amount. Compared to direct investing in foreign stocks (where you might be asked to maintain a minimum of $10,000 deposit), investing in mutual funds/ETFs are cheap.

1. People want to invest in their favorite companies: Apple, Google, Twitter, Facebook, Amazon, etc. are the darlings of this generation. And of course, many people want to invest in these companies.

2. Diversification: Investing in foreign stocks helps in diversification. Let’s assume that the Indian equity market starts falling due to some local region. However, investing in foreign stocks can mitigate the risk in your portfolio as the local reason may not have a significant effect on the international markets.

3. The bigger opportunities: Once you start to invest in foreign stocks, there are no boundaries anymore. You can hunt for better (profitable) opportunities in the international markets.Besides the above-mentioned points, few investors believe that foreign companies have better resources, facilities, government cooperation, and standards. That’s why they invest in foreign companies.Nevertheless, while deciding to invest in foreign stocks, you should also remember that India is that fastest growing economy in the world. On the other hand, most of the international markets are little saturated. Therefore, growth-wise, India has better potential.