Last updated September 13th, 2018.
You might find it hard to believe, but opening a brokerage account in the United States is one of the most versatile ways to invest in Asia.
Understand that a U.S. brokerage account will only let you access a small number of investment opportunities in Asia. Granted, opening an account from home is far more convenient than hopping on a plane.
The NASDAQ has the highest concentration of stocks in Asia outside of the continent itself. There’s 197 different stocks from China, Japan, India, the Philippines and dozens of other nations.
In fact, several companies headquartered in Asia don’t even list on their own country’s stock market. They often list on the NASDAQ or another exchange instead.
Major Chinese companies such as Baidu (NASDAQ: BIDU) and Home Inns (NASDAQ: HMIN), to name just two, aren’t listed on any stock exchange in Asia.
Invest in Asia with ETFs and Mutual Funds
Between the NYSE and NASDAQ, American stock exchanges boast the world’s largest collection of exchange traded funds (ETFs). This includes plenty of ETFs focused on Asia.
ETFs let you buy into diversified funds composed of many stocks from individual countries. For example, the iShares MSCI Thailand Fund (NASDAQ:THD) is made up of dozens of Thai stocks. Similar ETFs exist for almost every other large Asian economy.
A few of these ETFs short stocks while others even use leverage. The ProShares UltraShort MSCI Japan (NYSEARCA: EWV) is one such ETF that does both. It shorts Japanese equities with 2x leverage.
Opening a U.S. brokerage account also lets you access stocks from around the world – not just Asia. You can trade European, South American, and of course U.S. stocks.
That’s worth considering for anyone wanting to diversify outside of stocks in Asia.
But a U.S. Brokerage Isn’t the Best Way
With all of that said, a U.S. brokerage certainly isn’t the best way to invest in Asia. They’ll subject you to high management fees and even more absurd commissions.
Is your trading volume large enough to not mind paying $50 every time you buy or sell a stock? Because that’s the reality of making international trades in more obscure places like Malaysia or the Philippines.
Plus, Asia’s greatest opportunities aren’t found on a stock exchange – especially not New York’s.
It’s probably better to visit Asia yourself and find assets which aren’t as easily accessible. Barriers to entry might be inconvenient yet they often hide the best investments.
Nonetheless, there’s something to be said about convenience. Anyone who insists on buying stocks in Asia without hopping on a plane should open a brokerage account with Interactive Brokers. They seem to offer the best selection.
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