Investing and trading publicly listed stocks in foreign countries presents the possibility to capitalize on an increasing number of opportunities outside the U.S. While investing in foreign stocks sometimes carries with it exposure to political, economic/currency and social risks, other avenues also exist to invest “ex-U.S.” Malaysia, for example, is a strongly growing economy. Investing in Malaysia and other regions of the world can be accomplished electronically (with PC access) or by telephone, the latter of which is most difficult.
Establish a brokerage account with a firm that transacts directly in stocks listed on the Bursa Maylasia (formerly the Kuala Lumpur Stock Exchange). Some brokerage firms outside of Malaysia can expedite trades in Malaysian-listed securities, but firms in Malaysia have specific requirements to establish an account along with the related Central Depository System account. Such requirements include: minimum age of 18 years old, proof of citizenship or a non-Malaysian passport, notarized signature cards, bank and income statements (a bank account is linked for payment), and an application fee. Some items require multiple copies and the brokerage may waive the fee. An account representative (called a "Remesier") will be assigned the account and will be a direct contact for trading instructions. Give your Remesier accurate buy and/or sell instructions for the CDs account or enter orders online once approved for online trading.
Select a mutual fund--as an alternative--offered by a U.S. domiciled investment company. This can be a much more cost-effective way to gain exposure to overseas markets, but most foreign stock funds also incorporate other countries or regions, as well. As an example, the Allianz AGIC Pacific Rim Fund (ticker symbol: PPRAX) focuses exclusively on markets in the Asian region of the world, including a small portion oriented toward Malaysia. Mutual funds offer the benefit of professional portfolio management and diversification along with economies of scale (reduced expenses) not always realized when investing directly. Shares can be purchased from the fund distributor or in an individual domestic brokerage account if the firm has a selling agreement with the fund distributor.
Select a country- or region-specific exchange traded fund--as another alternative--that focuses broadly on the Pacific Rim or exclusively in Maylasia. The iShares MSCI Malaysia Index Fund (ticker symbol: EWM) trades on U.S. exchanges and can be bought and sold just like a stock during normal market hours. Unlike a mutual fund, the EWM is not actively managed by a portfolio manager. Rather, it replicates the underlying Morgan Stanley Commodity Index benchmark index (comprised of only stocks traded in the Malaysian market). As such, lower operating expenses exist. The EWM has exposure to more than 40 stocks of which the most notable are CIMB Group Holdings, Malayan Banking BHD, Sime Darby, Genting, IOI Corporation and Tenaga Nasional. It is diversified over many sectors such as Financial, Industrial, Consumer Staple/Discretionary, and Telecom and Utility industries. These shares are most easily traded by simply opening a U.S. brokerage account.
- Jupiterimages/Photos.com/Getty Images