Opening the door to overseas stock market opportunities - A look at CA, JP and SG
In your search for a better performing and diversified portfolio, have you considered the possibilities that overseas stock markets can open up? From enabling portfolio diversification to complementing your local investments and reducing your exposure to regional risks, large, liquid and high-performing foreign markets with unique assets can let you do more with your money. Overseas stock markets also offer the opportunity to invest in high-growth companies and industries with promising products, services, technologies or revenue models.
So how do you gain access to the wealth of the world?
The same brokerage services we offer for investors in the Hong Kong Stock market are available to help you build and optimise your investments in six other major markets: Canada, Japan, Singapore, US, UK and Australia. Together, they constitute more than 60.64 trillion US dollars in market capitalisation in 20211, and can open avenues for improving your dividend and capital gains beyond what’s possible on the Hong Kong Exchanges. In fact, Canada, Japan and Singapore deserve a closer look due to their unique characteristics.
Canada - big opportunities backed by strong fundamentals
PERFORMANCE OF MARKET**
*Toronto Stock Exchange market capitalisation as of November 2021, according to Trading Hours
**Performance of Canada Stock Market over the last five years, as of November 2021 and according to Trading Economics
What brings resilience to Canada’s stock market?
The Canadian stock market is highly cyclical, since commodities, energy, materials, and financials comprise 70% of the market.2 This makes it more predictable as it tracks economic growth and dips. However, it also has a reputation for resilience, having fared fairly well through the 2008 financial crisis as well as the downturn caused by the COVID-19 pandemic. The reason behind this is Canada’s oligopoly of Big Five banks, which gives it a stable banking system cited by the World Economic Forum as among the soundest in the world.
Nevertheless, market speculation is almost as rampant here as in the US, so do your research before jumping onto a rising trend.
Japan - restructured and rising again
PERFORMANCE OF MARKET**
*Tokyo Stock Exchange market capitalisation as of November 2021, according to Trading Hours
**Performance of Japan Stock Market over the last five years, as of November 2021 and according to Trading Economics
Why are investment prospects in Japan looking sunny?
Since the Japanese stock market crash of the late 1980s, many investors have overlooked the Nikkei 225 Index, but in the last two decades this stock market has seen a steady growth. Despite deflation and an ageing population, the economy has been resilient, and this is reflected in the stock market. Several factors play a role here.
The major firms on these exchanges are mature multinationals which have evolved their businesses to meet the changing needs of the domestic and international markets. Added to this are the improved profitability and better returns to shareholders dating back to Prime Minister Shinzo Abe’s structural reforms.
Singapore - dividend-led and cyclical with an international outlook
PERFORMANCE OF MARKET**
*Singapore Exchange market capitalisation as of November 2021 according to Trading Hours
**Performance of Singapore Stock Market over the last five years, as of November 2021 and according to Trading Economics
What makes SGX special?
Singapore's position as the financial hub of Asia is a big draw for investors looking to dip their toes in SGX, but that’s not the only reason why this stock market is so attractive.
It is one of the world’s most active trading centres, and Asia’s most international. Around 40%3 of the 6854 listed companies have overseas origins, and SGX is considered the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN. This makes Singapore Exchange a gateway for new investors to the larger Asian market.
*Sourced from Singapore Exchange Limited (S68) Sgd 10.05 in September 2021
Market rules: The simple summary
Sources: Worldwide Tax Summaries provided by PricewaterhouseCoopers
Tokyo Stock Exchange (TSE) by the Daytrade The World | Tokyo Stock Exchange Fee Schedule | Trading Hours & Opening/closing routine by Singapore Exchange
Your overseas investments can be impacted by global, regional and country-level macroeconomic factors, and sectoral and company performance. Stay in the know about the market trends that can affect your investments on TSX, TYO and SGX with regular updates from CIO insights. Catch up with your relationship manager regularly to discuss your investment portfolio.
New to DBS? Open your account and connect with an investment advisor who will walk you through the investment opportunities in overseas stock markets.
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Stay tuned for the deep dive into the US, UK & Australia stock markets!
1Largest stock exchange operators worldwide as of June 2021, by market capitalization of listed companies, according to Statista.
2Large-cap companies are usually industry and sector leaders that are well-established and have a significant market share. They are less volatile in comparison to mid-cap and small-cap stocks.
3Canadian Stocks Look Cheap, BofA Says. Why They Could Be Cyclical Superstars as of June, 2021.
4Singapore Exchange About us, as of August 2021.
5SGX Market Statistics Report June 2021.
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Investment involves risks. The information provided is based on sources which DBS Bank Limited and DBS Bank (Hong Kong) Limited believe to be reliable but has not been independently verified. Any projections and opinions expressed herein are expressed solely as general market commentary and do not constitute solicitation, recommendation, investment advice, or guaranteed return. The above information does not constitute any offer or solicitation of offer to subscribe, transact or redeem any investment product. Past performances are not indicative of future performances. You should make investment decisions based on your own investment objective and experience, financial situation and particular needs. You should carefully read the product offering documentation, the account terms and conditions and the product terms and conditions for detailed product information and risk factors prior to making any investment. If you have any doubt on this material or any product offering documentation, you should seek independent professional advice.
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