x Abu Dhabi, UAEFriday 28 July 2017

Global investments can be a breeze with online trading

Buying stocks in overseas companies is straightforward thanks to online brokerages.

There are a couple of international brands that I would like to buy shares in, but to do so I would have to access local markets. One of the brands is listed in New Zealand and the other in Singapore. As someone new to the concept of buying stocks, what is the best way of investing in these companies from here in the UAE? PD, Abu Dhabi

The expert advice

Adel Merhab, managing partner of tradeyourmarket.com

The financial world has never been as interlinked as it is today. The advancement of technology has allowed for easy and swift connections between international financial markets.

One of the prime beneficiaries of this technological advancement is that brokerage companies can now offer access to a large number of international financial markets from a single online platform.

A brokerage acts as the intermediary between a stock exchange – or any other type of exchange that facilitates the trading of financial securities – and the investor or trader.

The process is fairly simple. Investors can open accounts with licensed brokers in any market just as they would at a typical bank. Once accounts are open and funded, investors can then execute buy and sell orders of stocks and other financial instruments through their designated brokers.

In the old days, buying stocks in different markets meant that investors needed to open accounts with multiple brokers since a typical broker would focus on only one or a few markets at that time.

Moreover, the process of opening accounts previously involved a lot of paperwork, and buy and sell orders were placed over the phone, making the process all the more complicated for the investor.

Fortunately, things have become far simpler since then. Most brokers now provide access to multiple financial markets through:

1. A single online trading platform with access to most if not all major financial markets in the world

2. Online account opening forms

3. Online and application-based execution of buy and sell orders

In their attempt to compete for business, brokerage companies across the globe have exerted tremendous efforts in trying to become a one-stop shop for investors. And it’s all online.

This does not mean that the top brokers are able to offer access to every single financial market in the world, but they are largely able to provide access to the majority of actively traded markets in the world.

For example, Singapore is a market that is covered by many of the top online brokers given its significance as a key Asian market. On the other hand, the limited demand for trading New Zealand stocks by international investors means that it is unlikely to be offered by one-stop brokers.

Still, access to any specific market, such as New Zealand, is possible by simply setting up an account with one of the online brokers based in the country.

All investors have to do these days is search for the list of top online brokers and the markets they cover and make their pick.

The reader’s advice:

Kyle Dawson, Dubai

As a UAE-based expat I have been investing in the New Zealand stock exchange for the last 13 years through a New Zealand-based online broker. However, as a New Zealand passport holder this has been made a lot easier as I have an address, a tax number and a local bank account, all of which are requirements for the online multiple-market platform that the brokerage provides.

I am uncertain if these requirements are essential for all brokerages (or all platforms they provide), but they have definitely made it far more efficient when undertaking dealings throughout the Australasian markets, especially when initially depositing and eventually repatriating funds.

On another front, it is pleasing to see an investor recognising the existence of a quality New Zealand brand that I feel are very limited in number on the international stage.

Next month’s money clinic:

I am a professional working for a law firm In Dubai. By way of investment, I am interested in buying shares/stocks of companies in the UAE.

I am new to this concept and would like to know more, such as where I should go and whom I should approach for this. Could you please let me know? MA, Dubai

Every month The National features a reader’s personal finance problem. If you have an issue or would like to suggest a solution for another’s reader’s concern, write to pf@thenational.ae

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