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How do you invest in stocks of foreign markets?

06 Mar

Are there special brokerages for that? Or what?
Please elaborate

 

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  1. Tom Z

    March 6, 2010 at 8:35 pm

    At least one way to do it is through an American Depositary Receipt – ADR

    An ADR is a negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas. ADRs help to reduce administration and duty costs that would otherwise be levied on each transaction.

    This is an excellent way to buy shares in a foreign company while realizing any dividends and capital gains in U.S. dollars. However, ADRs do not eliminate the currency and economic risks for the underlying shares in another country. For example, dividend payments in euros would be converted to U.S. dollars, net of conversion expenses and foreign taxes and in accordance with the deposit agreement. ADRs are listed on either the NYSE, AMEX or Nasdaq.

    There are also International Depository Receipts

    An IDR is a negotiable, bank-issued certificate representing ownership of stock securities by an investor outside the country of origin. It is the non-U.S. equivalent of an American Depositary Receipt (ADR).

     
  2. Kevin S

    March 6, 2010 at 8:52 pm

    No need for an ADR. Certain brokerages like etrade and interactivebrokers will allow you to do that. Check out their sites to see their updated lists of exchanges.