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Use research on ADRs, STI stocks to woo retail players
01-10-2010, 09:40 AM.
Post: #1
Use research on ADRs, STI stocks to woo retail players
Business Times - 01 Oct 2010
Use research on ADRs, STI stocks to woo retail players

By R SIVANITHY

SOON, local investors will be able to invest in 19 large Asian companies via American Depository Receipts (ADRs) to be quoted on the Singapore Exchange's new GlobalQuote board. Among the 19 are supposedly famous names that include Internet search provider Baidu Inc and China's largest maker of photovoltaic solar panels Suntech Power Holdings - both of which are only traded in the US - and Chinese oil giant PetroChina, which is also listed in Hong Kong.

If successful, more such ADR listings are envisaged and this could well be a major cornerstone for SGX's future growth. It is therefore crucial to ensure success. While institutional interest can be taken as a given, it is equally vital to encourage retail support.

From the experience over the years in segments such as structured warrants and other derivatives such as single-stock futures and options, it should be obvious that without the vast resource that is the retail public, any initially impressive performance posted by a new instrument simply does not last - the retail public has to be engaged if any new initiative is to take off.

How might SGX draw individual players in? By collating all the latest research on the companies involved and posting this on its website.

This is because although investors here may recognise some names - or have some familiarity with the prospects for bigger names such as PetroChina - not all the prospective listings would be instantly familiar to the man in the street, such as Aluminium Corp of China or Netease.

SGX could either gather the research itself from the big brokers who cover these stocks or request it from the companies themselves. Also, the research doesn't have to be that up-to-date - as in posted on the day it is published - since institutional clients of research houses pay for exclusivity. But reports that are say, a few days old, would still be of great use to the investing public and their availability would go a long way towards generating interest among retail investors who cannot reasonably be expected to know and evaluate the prospects of several foreign companies that are to be quoted at the same time.

As a further service to small investors, this posting of relatively current research on SGX's website should be extended to include Straits Times Index stocks, particularly those that are traditionally seen as institutional plays for which research is not widely available to the retail public.

(Actually, index guardians should make widespread research coverage and availability a requirement for inclusion in a benchmark such as the STI, but that's another story).

In the past month, stocks of the Jardine group, for example, have risen continually to all-time highs, led by Jardine Matheson, Jardine Strategic and Jardine Cycle & Carriage. These gains have played a major part in propelling the STI to new two-year highs, yet it would be fair to say that few retail investors have any idea what the reasons are for Jardine's surge, or how the investment community views the Jardine group (or for that matter, the complex relationship between Jardine stocks).

Because of the pivotal role the STI plays in daily market life, SGX, as a service to the retail public, should instruct not just Jardine but all 30 STI members to provide the exchange with the latest, publishable research and place this on its website. Again, this doesn't have to be on the day the reports are released; a delay of a few days would be acceptable to keep clients happy.


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06-10-2010, 12:06 AM.
Post: #2
RE: Use research on ADRs, STI stocks to woo retail players
Have to see whether the liquidities are substantial in SGX or not.

Some of the big names like Baidu and PetroChina can be bought at either HKSE or NYSE or both. And at least there's a guaranteed liquidity over there.

Why the double listing?
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08-10-2010, 11:33 AM.
Post: #3
RE: Use research on ADRs, STI stocks to woo retail players
(06-10-2010, 12:06 AM)arthur Wrote: Have to see whether the liquidities are substantial in SGX or not.

Some of the big names like Baidu and PetroChina can be bought at either HKSE or NYSE or both. And at least there's a guaranteed liquidity over there.

Why the double listing?

The ADRs can split into 2 grps, without Asian Listing, like Baidu, Suntech power etc. with Asian Listing, like Petro China etc.
More benefits for those without Asian listing, they can trade round the clocks and react 1st to whatever news release in the Asia market.




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08-10-2010, 10:25 PM.
Post: #4
RE: Use research on ADRs, STI stocks to woo retail players
(06-10-2010, 12:06 AM)arthur Wrote: Have to see whether the liquidities are substantial in SGX or not.

Some of the big names like Baidu and PetroChina can be bought at either HKSE or NYSE or both. And at least there's a guaranteed liquidity over there.

Why the double listing?
hi arthur may i ask how do u efficiently buy stocks from HKSE on a low-cost basis?


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11-10-2010, 01:38 AM. (This post was last modified: 11-10-2010, 01:43 AM by arthur.)
Post: #5
RE: Use research on ADRs, STI stocks to woo retail players
(08-10-2010, 10:25 PM)pianist Wrote: ]hi arthur may i ask how do u efficiently buy stocks from HKSE on a low-cost basis?

Hi there.

Are you thinking of something like a dollar averaging methodology with small capital inputs monthly?
If so, you could perhaps look out for China unit trusts that allows you to do regular capital inputs.

You may try the funds selector screen at Fundsupermart for funds that concentrate on East Asia or China, HK counters. Also the screen will allow you to see whether you could do a regular monthly capital input into the fund you selected.

For myself, I have a sizable capital to invest around the world. Some counters I owe can be as divest as Brazil counters to French utilities shares. Many of the international counters can actually be bought at NYSE as ADR counters.

For HKSE shares, I have allocated a sizable portion to buy them so I am afraid UTs is the best idea for you.

Any experienced former who knows a better way, pls chip in and help the new guys ya?

Cheers.
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11-10-2010, 09:06 PM.
Post: #6
RE: Use research on ADRs, STI stocks to woo retail players
pianist Wrote:how do u efficiently buy stocks from HKSE on a low-cost basis?

Most of the local brokers can help you buy HKSE stocks. The brokers will act as nominees to hold the shares, so if you want to sell you have to use the same broker. This way is convenient since you have a local contact if you need help. But there is a custody charge of $2 per month per counter. This is $24 per year, so try to own at least $2,400 worth per counter to keep the holding cost under 1%. Brokerage charges are listed for the various brokers, and range from 0.25% to 0.4%, with minimums ranging from HK50 to HK200.

Alternatively, you can open an account directly with a broker in HK itself. That way you can hold your shares at CCASS (the HK equivalent of CDP) allowing you to buy and sell through any broker. This is slightly cheaper (no custody charge) but you have to make an international call every time there is a problem. And you may need to have a good command of Cantonese.

Personally, I buy HK shares through a Singapore stockbroker. I would rather have a local person to deal with when (not if) there is a problem. The custody charge is annoying, but I can deal with it since I own more than $2,400 worth of each counter.

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11-10-2010, 11:16 PM. (This post was last modified: 11-10-2010, 11:19 PM by arthur.)
Post: #7
RE: Use research on ADRs, STI stocks to woo retail players
(08-10-2010, 10:25 PM)pianist Wrote: hi arthur may i ask how do u efficiently buy stocks from HKSE on a low-cost basis?

After reading d.o.g post, i realised I mistook the low cost basis as capital inputs. I believe you are referring to commission charges?

For myself, I don't hold a account in HK itself as per what d.o.g said, the local brokerages do provide such svcs and the problems are much eaily resolved locally than overseas should discrepancies arise.

Many brokerages offer HKSE counters facilities, DBS Vickers, POEMS, OCBC, etc.

For POEMS charges, you may refer to POEMS website -> Help Centre -> Commission Charges -> Hong Kong.

In addition, to share a piece of additional info for everyone benefits, should one wish to trade NYSE or NASDAQ counters, the comission charges for local brokerages are way too high. It would then be better to approach a foreign brokerage like Interactive Brokers which has a office in town.
Do take note they would need a deposit of $10k before you could open a margin account with them. Kinda expensive.. yeah.
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11-10-2010, 11:45 PM.
Post: #8
RE: Use research on ADRs, STI stocks to woo retail players
arthur Wrote:should one wish to trade NYSE or NASDAQ counters, the comission charges for local brokerages are way too high. It would then be better to approach a foreign brokerage like Interactive Brokers which has a office in town.

Interactive Brokers can also provide HK stocks, much cheaper than the local brokers. I use the local broker because IB can't do SGX stocks yet, and I prefer to keep all the trades at one broker for ease of administration.

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11-10-2010, 11:57 PM.
Post: #9
RE: Use research on ADRs, STI stocks to woo retail players
(11-10-2010, 11:45 PM)d.o.g. Wrote:
arthur Wrote:should one wish to trade NYSE or NASDAQ counters, the comission charges for local brokerages are way too high. It would then be better to approach a foreign brokerage like Interactive Brokers which has a office in town.

Interactive Brokers can also provide HK stocks, much cheaper than the local brokers. I use the local broker because IB can't do SGX stocks yet, and I prefer to keep all the trades at one broker for ease of administration.

Hi guys,

u can also find out more on saxo capital. u can buy local stocks n hk stocks through their platform. no custodian fees for hk stocks. the commissions are very competitive.

i have enquire on the transfer of hk stocks if need be transferred to a local broker n saxo has no problem with that n they do not charge for the transfer as well.

fyi.

cheers,
bognster31

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13-10-2010, 01:02 AM.
Post: #10
RE: Use research on ADRs, STI stocks to woo retail players
hi arthur, d.o.g. & bognster31, thank you for the replies and sharing. These replies helped my problem which i have been facing for a few weeks as i am exploring how to best enter hong kong market. I saw many companies that I like to invest in while i went working in hong kong recently.

I actually also sent an email to SFC hong kong and just received a very general reply that directs me to other urls in their website. i realise that the CCASS (Central Clearing and Settlement System) Investor Participant Account managed/maintained by HKeX also imposes charges on custody services if an individual opened such an account with them directly, and also that individuall has to have an HK id or macau residential id. so that leaves me out with the remaining options of either trade through local sg brokerages or HK brokerages based in HK.
initially i tot this ccass (just like CDP) provides scripless shares services and i am puzzled how come there is still charge for custody fees? isnt custody service apply to pple who wants to hold share certificates.

Does interactive broker or saxo capital handles/provides corporate action services (rights issues, voting) for retail investor like us buying and holding HK stocks i ask because i seldom trade.

Do i still need to provide them a local hk residential/mailing address if I were to open a trading account in hk directly?


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