How to Buy Stocks on a Foreign Stock Exchange

How to Buy Stocks on a Foreign Stock Exchange
••• Foreign and Commonwealth Office, Flickr

Investing in foreign stock exchanges can be as easy as buying stocks domestically, or much more challenging depending on the regulatory framework of the country in question and the level of technological development there. In some countries, foreigners are completely barred from the stock exchange or from specific classes of stock. In some cases, it may be possible for domestic investors to buy foreign stocks through domestically listed mutual funds.

Look up the stock exchanges in the country that you want to invest in. Some online brokerage firms located domestically offer the ability to invest in foreign companies using foreign currencies.

Be aware of the additional expenses and challenges involved in investing in foreign exchanges. Not only might it be the case that you need to pay for taxes in two countries, complications will be introduced through changing currency values and fees related to exchange.

Consider purchasing American Depository receipts. These derivative securities move up and down depending on the value of stocks located on foreign exchange and can be traded freely just like any other stock.

Determine if you will need to contract with a foreign broker in order to purchase stocks on the exchange in the country you want to purchase stocks in. In the Philippines, for example, foreign investors need to work through a brokerage located in that country.

Consider learning more about trading foreign currencies to supplement your foreign investment efforts. Building up a reserve of the currency that you trade stocks in will create more opportunities to trade foreign stocks profitably.