How can I buy shares in companies being floated on foreign markets?

Jackwatson

Hi there,

I would like to buy some shares in a company which is being publicly floated on the Australian Securities Exchange (ASX) next month.

I've never bought shares myself before, but understand I probably need to find a broker to set everything up, so currently that's what I'm looking for.

If anyone has gone through this process before, and has some advice on how to proceed it would be great to hear from you!:j

Thanks!
Jack

george4064

First of all, I know this will be a difficult task. For various reasons;

1. It will be very difficult to even find a platform/broker in the UK who will let clients hold stocks on the ASX.

2. It will also be very difficult to find a broker/investment bank in the UK who you will be able to participate in the float to market.


3. In the unlikely event you do find a UK platform who lets clients hold stocks on the ASX, you will most likely find yourself facing very high fees including high transaction costs.


In addition, you should consider a balanced portfolio than just putting all your eggs in a new stock on ASX! (Lots of people will ask you about this one)

Atreyu107

To give you a bit of technical background, the ASX uses a settlement system called CHESS which caters for the antipodean markets, compared to CREST and Euroclear which settle the domestic and European markets.

Firms have to pay to use different settlement systems, and few retail exo brokers are set up for CHESS settlement.

Furthermore, you'll need to read the IPO prospectus to clarify whether it can even be purchased in the UK. I recall that even the prospectus for the Alibaba IPO when it listed on the NASDAQ was prohibited from being distributed in the UK, let alone offered for subscription.

HouseBuyer77

I recall that even the prospectus for the Alibaba IPO when it listed on the NASDAQ was prohibited from being distributed in the UK, let alone offered for subscription.

From memory because Alibaba is a chinese company, foreigners can't actually own stock in it. To get around this a shell company is setup that owns all of the stock. You then purchase shares in the shell company, Maybe this kind of arrangement falls afoul of the law here?

You might be able to get an account on an online Australian brokerage. Google around for some and see what their account Ts&Cs say. Beware that you will also have to deal with the Australian tax system and transferring money back to the UK.

shaun_from_Africa

Buying shares that are listed on many foreign markets is often no different from buying UK listed shares.
The broker I use is TD direct:
http://www.tddirectinvesting.co.uk/home-one
and once registered, you can buy shares from a number of worldwide markets including Australia.

grey_gym_sock

with the exception of privatizations, new issues of shares are often a bad time to buy shares. you're buying from somebody who know a lot more about the company than you do, at a time of their choosing. especially if the seller is a private equity firm, they may have loaded the company up with excessive debt before the floatation.

privatizations can be an exception, because often the government deems a issue a "success" if lots of ppl apply and the share price rises sharply after the issue, so they don't mind selling it cheap. (and of course, they're selling on behalf of the public, not on their own behalf, so they aren't the ones losing money if the issue price is too low.)

bowlhead99

shaun_from_Africa wrote: »

Buying shares that are listed on many foreign markets is often no different from buying UK listed shares.
The broker I use is TD direct:
http://www.tddirectinvesting.co.uk/home-one
and once registered, you can buy shares from a number of worldwide markets including Australia.

Yes, I use them too and have an Aussie share among my holdings. Highly doubt you'd be able to participate in the Australian IPO though, so if you don't want to buy in at post-IPO cost, or buy any other investments instead, probably not worth setting up the account and incurring fees on it.