When I told my favorite uncle, Yaha, that I was going to leave my safe, steady paycheck job to start my own company, he told me an old Japanese proverb — “Koketsu ni irazunba koji o ezu“.
Translated, it means, “To catch a cub, you must enter the tiger’s cave.”
Uncle Yaha’s point was simple: Nothing ventured, nothing gained. I think that same lesson applies to investors interested in Asian opportunities.
The best part is that a recent announcement from a major brokerage house is yet another sign that we’re entering a golden age of international investing …
E*Trade to Begin Offering
Cheap, Online Foreign Trading
E*Trade, the major Internet deep discount broker, recently announced that its customers will be able to buy and sell foreign stocks with just a few mouse clicks. This is a major development, and it has importance for both individual investors and foreign stock markets.
The company’s new international trading service is called Global Trading, and it makes it simple, easy, and inexpensive for you to buy and sell foreign shares in six key markets — Canada, France, Germany, Hong Kong, Japan, and the United Kingdom. And yes, you can do it all over the Internet at discount brokerage rates.
It’s not quite as cheap as trading U.S. stocks through E*Trade’s site, but it’s not far off: Online, non-broker assisted commissions for foreign trades will be a little more than $20 each! That’s a bargain compared to what many brokers charge.
E*Trade will provide real-time stock quotes during local operating hours for five of the six international exchanges. The exception is Hong Kong, which will provide quotes on a 20-minute-delayed basis. Investors will also have access to free, basic research on many of the most widely-held international stocks.
Investors won’t be limited to just those six markets, either. E*Trade offers broker-assisted trading for 36 additional international markets — including countries like Singapore and India. These trades carry higher prices, but E*Trade plans on expanding its Global Trading services in the near future.
And I suspect it won’t be long until other deep discount brokerages follow the company’s lead. Soon enough, investors should have more choices when it comes to cheap, online international trading …
What You Can Learn
From E*Trade’s News
E*Trade has a simple reason for ramping up its international trading operations: Its customers want these services! Based on a recent survey, two-thirds of the company’s clients said they were interested in trading shares directly on foreign exchanges.
What I take away from this is that there’s a wave of additional purchasing power waiting in the wings to start piling into foreign stocks. It signals just how important overseas opportunities are becoming for U.S.-based investors.
Moreover, I don’t think it’s a coincidence that three of the markets included on E*Trade’s Global Trading platform happen to be hotbeds for Asian stocks:
JAPAN: The Japanese stock market is more than 50% below its all-time high set back in 1989. In my opinion, it offers some of the cheapest valuations to be found anywhere in the world.
HONG KONG: Hundreds of mainland-China-based companies are listed in Hong Kong. In fact, a lot of the Chinese stocks you’d want to own are listed in Hong Kong rather than on the Shanghai or Shenzhen stock exchanges.
LONDON: Asia might not be the first thing you think of when it comes to the United Kingdom, but Britain’s colonial past means many stocks from India, Singapore, and Malaysia are listed on the London Stock Exchange.
Between those three markets, E*Trade’s customers will have more Asian opportunities than they can shake a stick at. I’m not on the company’s payroll, but I have to say that for a few mouse clicks and about $21 a trade, that’s pretty darn exciting!
If You’re Overly Concerned About
Investing in Asia … Don’t Be!
Judging from my e-mail box, I know some investors are still a little reluctant to invest in China given the sharp sell-off that the Shanghai and Shenzhen markets saw two weeks ago.
Yes, there are risks. That’s true of all investments. However, I remain bullish on Asian markets. And so do Asian investors! Check this out:
Starting at about five in the morning last week, a long line of investors formed in front of banks in Shanghai. Everyone wanted to be the first to buy shares of a newly released mutual fund.
The new fund, released on March 6, issued 10 billion yuan worth of shares (US$1.2 billion), and sold out within minutes!
Another thing: China’s markets have already recovered a heck of a lot of ground. The Hong Kong Hang Seng Index, for example, has rebounded from 19,134 to 20,147. It’s only 5% from its high!
|
Company |
Ticker | Feb 27 Bottom | March 9 Close | % Gain |
|
China Aluminum |
ACH | $22.60 | $25.20 | 11.5% |
|
Suntech Power |
STP | $35.36 | $39.30 | 11.1% |
|
China Life |
LFC | $37.76 | $41.48 | 9.8% |
Many Chinese stocks that are listed on U.S. exchanges are also on fire. Many are up by double-digits since February 27, and they don’t show any signs of slowing down.
And don’t limit yourself to looking at China, either. There are other countries across the Pacific with booming economies. Just three of them:
- Hong Kong’s economy expanded 6.8% in 2006. And according to a just-released forecast from Financial Secretary Henry Tang, the country should see another gain of 4.5% to 5.5% in 2007.
- The Indian government expects its GDP to grow 9.2% in 2007. That’s the fastest pace in 18 years!
- Singapore’s economy increased 7.9% in 2006, up from an initial estimate of 7.7%. The Ministry of Trade expects another 6.5% gain in 2007.
I know it isn’t easy to buy when the headlines are screaming “Run, Run, Run.” But these unsettling times are exactly when you should start looking to buy.
Best wishes,
Tony
P.S. If you need help deciding what specific Asian stocks to buy, consider subscribing to my Asia Stock Alert service … it’s only $199 a year!
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