Last updated November 16th, 2021.

 

You might think it sounds counterintuitive, but opening a brokerage account in the United States is still among the most versatile ways to buy stocks in Asia as a foreigner.

Granted, your brokerage account in the U.S. will only let you access a small number of investment opportunities in Asia. It’s not a full solution to access the region by any means.

It’s also more convenient than hopping on a plane and opening a brokerage account in Hong Kong or Singapore though – at least if you’re an American or European citizen.

Besides stock exchanges which are based on the continent of Asia itself, the NASDAQ hosts the largest concentration of Asian stocks.

You’ll find over 200 different stocks from China, Japan, India, the Philippines and dozens of other nations listed on either the NASDAQ and New York Stock Exchange. Most of them are secondary listings or ADRs.

Still, many companies which are headquartered in Asia don’t even list on their home country’s stock market at all. They commonly decide to have their primary listing on a foreign stock exchange instead.

Industry-leading Chinese companies such as NIO (NYSE:NIO), Pindudoduo (NASDAQ:PDD), and DiDi (NYSE:DIDI), naming just three examples, aren’t currently listed on any stock exchange in Asia.

 

China’s main search engine, Baidu, was only listed on the NASDAQ exchange up until very recently. The company debuted its Hong Kong secondary listing in 2021.

Buying Asia Stocks With U.S. Funds and ETFs

Between the NYSE and NASDAQ, American stock exchanges host the world’s biggest collection of exchange traded funds (ETFs). This includes plenty of ETFs focused on Asia.

ETFs let you buy into diversified funds composed of 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 practically all other decent-sized stock markets in Asia including Vietnam, Indonesia, and Malaysia.

A few of these ETFs short stocks while others even use leverage to amplify their returns (and losses!). For example, ProShares UltraShort MSCI Japan (NYSEARCA: EWV) is one such ETF that does both. It shorts Japanese equities with 2x leverage.

To summarize: 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 with a broker in America.

That’s worth considering for any stock investor who wants to diversify abroad and can already access U.S. markets.

 

…But a U.S. Broker Isn’t the Best Way to Trade in Asia

With all of that said, a U.S. brokerage certainly isn’t the best way to invest in Asia. International trades will subject you to high management fees and absurd commission rates.

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 stock trades on more obscure exchanges like Malaysia or the Philippines.

Plus, Asia’s greatest opportunities aren’t found on a stock market – especially not New York’s.

It’s probably better to visit Asia yourself and find assets that aren’t as easily accessible. Barriers to entry might be inconvenient if you’re a foreign investor. Yet they often hide the best types of assets.

Nonetheless, there’s something to be said about convenience. And a U.S. broker offers exactly that.

If you insist on buying stocks in Asia without opening a brokerage account in either Singapore or Hong Kong, Asia’s two main global financial hubs, perhaps consider opening a brokerage account with Interactive Brokers.

Out of all brokerage firms based in the U.S., IB provides the greatest amount of trading options. They let you trade in South Korea, India, and a few other markets. By comparison, Fidelity and Schwab will let you access Japan, Hong Kong, and that’s about it.

Indeed, IB’s international reach seems broad next to their competitors, letting you invest in Asia more than Fidelity or Schwab does. But that isn’t saying a whole lot by any standard.

Such brokerage firms still don’t offer complete access to stock exchanges in the Asia-Pacific region, like a brokerage account actually based in Asia does.

The end result? If you’re purely using a brokerage account in the U.S. rather than one based in Asia, you’re missing out on the continent’s best performing stock exchanges.

In particular, you’re missing out on trading stocks in Asia’s frontier market economies. They’re harder to access, yet they’re easily the most profitable way to invest in Asia.

Vietnam, Indonesia, and the Philippines and several other nations are going through a period of rapid growth and shouldn’t be skipped.

 

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About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He's an international stock trader and property investor based in Thailand, Cambodia, and several other places. Reid manages the world's first and only frontier market real estate fund and has been featured in publications such as Forbes, Property Report, the South China Morning Post, and Seeking Alpha. You can download his free investment guide by clicking here.

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