- Investing internationally can help you diversify your portfolio and spread your risk.
- You can trade international shares online, 24/7, through online share trading platforms.
- This is a step-by-step guide on buying international shares in Singapore.
Investing in shares could help you generate wealth in the long term, provided you invest in the right stocks.
The good news is that your portfolio isn't limited to the local market, as buying shares in leading international companies is more accessible than ever.
All you need to do is sign up with one of the many online stockbrokers providing access to international markets and invest in your favourite shares trading on global stock exchanges like the New York Stock Exchange (NYSE), NASDAQ and London Stock Exchange (LSE).
Scroll down for more details on how you can get started.
In this guide
Why should I consider purchasing international shares?
If you only invest in Singaporean shares, you may find yourself limiting your portfolio's performance. That's because the Singaporean stockmarket only forms a small part of the global stockmarket.
By investing internationally, you can gain access to large companies not listed in Singapore. For instance, the US stockmarket gives you the option of investing in stocks of several global leaders, such as Alphabet, Amazon, Apple, Microsoft, Netflix, Tesla, and many more. You can also find more companies in the tech sector overseas, which is considered to be under-represented in Singapore. Furthermore, investing in international shares helps you diversify your portfolio, which can reduce your investment risk.
Interestingly, investing in international shares is not as expensive as you may think. In fact, several online platforms like Stake and eToro offer commission-free trades in major markets (such as US markets), making it cheaper to buy international shares than Singaporean shares in some cases.
Pros and cons of international share trading
Overall, if you are planning to purchase international shares, you should apprise yourself of the benefits and drawbacks to plan an investment strategy that matches your risk appetite. Investing in shares is subject to market risk, but purchasing international shares can help control that risk. The success of your portfolio, however, will ultimately depend on the type of stock you choose and how it performs during your investment horizon.
Pros
- Investors trading Singaporean shares are limited to stocks of companies listed on the SGX. International share trading gives you exposure to companies listed on international stock exchanges, such as NYSE, NASDAQ and LSE. The Singaporean sharemarket only constitutes about 1% of the global equities market. So, international share trading can help diversify your portfolio by giving you access to a broader market.
- An internationally diverse portfolio could also help minimise your investment risk, although investors must understand that equity markets are volatile in nature. If all your money is invested in Singaporean stocks, a market downturn could erode your entire portfolio. But if you are invested in different markets, it's unlikely for multiple markets to go through a downturn at the same time, which could make it easier for you to ride the volatility in one market.
Cons
- Having international shares in your portfolio makes you vulnerable to changes in the exchange rate. Depending on the fluctuations in the price of the currency, your portfolio return can go down or up in time.
- Your returns are also subject to the political climate of the countries in which you invest. Any changes in a country's foreign policy or other issues may impact your investment's value.
- Taxation of capital gains on international shares can be complicated at times, but an accountant can take care of that.
Options for international investment
If you wish to buy international shares, there are three ways to explore:
- You could directly invest in stocks listed on global exchanges using a share trading platform.
- You could invest in an exchange-traded fund (ETF), which is essentially a basket of securities designed to track the performance of market indices (like S&P 500), sectors, commodities, and so on.
- You could also gain exposure to international markets through contracts for difference (CFDs) that track global shares. CFDs are derivative-based products where you speculate on the price movement of underlying assets, such as global shares. As you don't own the underlying asset with CFDs, you can profit from such an instrument irrespective of whether the market is going up or down, depending on your outlook. But CFD trading is typically more complex than buying shares or investing in managed funds and ETFs. It is usually considered more suitable for experienced traders.
Note that you can only trade Singaporean shares during business hours, while international shares can be traded online 24/7.
Here's a list of some of the top-performing online brokers that allow you to trade both international shares and CFDs.
On website
Highlights
- Trade blue-chip stocks in the US, HK, and SG markets.
- Moomoo is the first global digital brokerage to offer a $0 platform fee, $0 data fee, and lifetime $0 commission for US stocks, trade with no fees in Singapore
- Earn up to 6.8% interest rate through Moomoo Cash Plus account.
On website
Highlights
- Supports U.S. equities, H.K. equities, ETFs, options, and futures as well as margin trading for investors.
- Enjoy some of the most competitive commission fees in the market here at Tiger Brokers to add value to your investing journey.
- Holds a Capital Markets Services Licence under the Securities and Futures Act issued by the Monetary Authority of Singapore (MAS).
Webull
Highlights
- Get up to USD 3000 cash vouchers and earn 5.4% p.a. when you signup, fund your account and trade with Webull. Terms and Conditions apply.
- Trade US stocks, ETF, and Options with $0 commission, $0 platform fee, and $0 membership fee.
- Trade HK stocks with $0 commission, $0 platform fee, and $0 membership fee.
- Provides intuitive and powerful advanced charts, multiple technical indicators, and premier Level 2 Advance (Nasdaq TotalView).
Pros
Cons
On website
Uphold
Highlights
- Trade between cryptocurrencies, precious metals, U.S. equities and national currencies in one easy step
- Access some of the cheapest Forex rates on major currencies, including USD, EUR and GBP (from 0.2%).
- 0% trading commissions.
On website
Interactive Brokers
Highlights
- Enjoy low commissions and financing rates.
- Invest globally in stocks, options, futures, currencies, bonds and funds from a single integrated account.
- Take advantage of IBKR's trading platforms, free trading tools and comprehensive reporting to help you get ahead.
Saxo Markets
Highlights
- It only takes five minutes to open your account online.
- Get ultra-competitive spreads and commissions across all asset classes.
- Get news, commentary and actionable trade ideas from their team of expert analysts.
Buying international shares in Singapore is quite straightforward. Here's how to get started.
Step 1: Select a trading platform
There are a number of trading platforms with access to international markets. Some of the factors you may consider while comparing brokers include:
- Brokerage fees.
- International markets you are allowed to trade on.
- How long does it take for a transaction to be executed?
- Foreign exchange fee.
- Access to market research and research tools.
- Buffer size, which is a percentage of the order value added to your cost to protect the provider from currency fluctuations while the trade clears.
- Whether mobile trading is available and free.
- Customer service hours.
- Any limits on restrictions or order size.
Step 2: Sign up for an account
You can open a share trading account online if you meet the following criteria:
- You are 18 years or over.
- Have a Singaporean residential address and mobile number.
- Possess a valid ID proof, such as a driver licence, birth certificate or passport to verify your personal details.
Step 3: Fund your trading account
Once your personal details are confirmed, you can provide details of your bank account to link it to your trading account or set up other financing options if available. Once all the information is updated, you can fund your account and start trading.
Note that some online platforms have minimum trading limits so you need to fund your account accordingly.
Step 4: Start trading
Before you start trading, decide whether you wish to invest in shares, ETFs or CFDs. As CFDs are derivatives-based, they are considered riskier and more complex. So, CFD trading is generally advisable for experienced traders. If you are a beginner, ETFs can provide you with an easy way to spread your risk through portfolio diversification compared with investing in shares of a single company.
Once you've decided where you want to invest, you can begin trading online through your new international share trading account. You are likely to find a dashboard with features like current market prices, change in prices over time and options to research and trade. Some platforms also provide free tutorials for beginners that could help you get started with confidence.
Verdict
Investing in international shares can help you diversify your portfolio and spread your risk. Still, it's worth remembering that share prices are volatile, and they can quickly go up and down, having a massive impact on your investments. Therefore, it's important to research each share investment and learn about the pros and cons to pick assets that match your risk appetite and investment goals.
Whether you’re a seasoned investor or a relative newcomer, there's an app for you! Read our guide on the best investing apps for Singaporeans.
