# investing in ASX?



## twowheeled (Jan 15, 2011)

I'm looking at an equity I want to buy on the ASX, currently I am through TD and Questrade. I'm looking for advice on how to exchange CAD/AUD or USD/AUD cheaply and also any other tips one might have? I searched for something like norbert gambit but cannot find an example for AUD.


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## james4beach (Nov 15, 2012)

I suspect that Interactive Brokers will be the only place you can do this. You can use their FX trading system to convert currencies and then should be able to buy securities on the ASX.

Is it really worth all this effort though? You can get broad exposure to Australia by simply buying EWA. The heaviest weights in it are Commonwealth Bank, BHP, CSL, WestPac, ANZ Bank. If you're trying to buy one of those, just using EWA will do the trick (approximately).


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## gardner (Feb 13, 2014)

There are also some ADRs tradable on US exchanges.

https://topforeignstocks.com/foreign-adrs-list/the-full-list-of-australian-adrs/

Some of the ones I might want -- Telstra, for example -- are OTC though.


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## l1quidfinance (Mar 17, 2017)

As James says. It's either Interactive Brokers or through an ETF.

For interactive brokers just consider the $10 inactivity fee. 
ASX fully franked dividends would have no AUS withholding tax but will be fully taxable at your marginal rate.

I've had a look at the banks but especially like Transurban. Although way too expensive at current valuation for my liking and Sydney airport Holdings.


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## agent99 (Sep 11, 2013)

l1quidfinance said:


> As James says. It's either Interactive Brokers or through an ETF.


Or as Gardner already said - ADRs that can easily be traded, likely on any on-line brokerage. I have a number of ADRs, but have never looked at Australia. Have them in registered a/c, so tax not an issue.


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## l1quidfinance (Mar 17, 2017)

Yes if they are good liquid ADR's but your choice is significantly limited. 

Such as the example Gardner posted being OTC which is also not eligible to be held inside registered account.


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## Fain87 (Jan 20, 2018)

twowheeled said:


> I'm looking at an equity I want to buy on the ASX, currently I am through TD and Questrade. I'm looking for advice on how to exchange CAD/AUD or USD/AUD cheaply and also any other tips one might have? I searched for something like norbert gambit but cannot find an example for AUD.


Questrade charges clients $195 USD for ASX trades + there's FX fees for the conversion + another 25-50 embedded inside the order by the domestic broker they send the order to. 

Interactive Brokers is much cheaper for this. . . 

ADR and Foreign Ordinary shares are OTC markets are usually more expensive to purchase. Better to purchase on the domestic market than OTC.


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## agent99 (Sep 11, 2013)

Fain87 said:


> ADR and Foreign Ordinary shares are OTC markets are usually more expensive to purchase. Better to purchase on the domestic market than OTC.


Not sure exactly what you meant. Could be that buying OTC could be more expensive, but I have no experience with that. 

With ADRs, I have not noticed any difference. ADRs are really a separate type of security, but based on an underlying stock. For example, one I own is Royal Dutch Shell. The ADR actually represents two shares. I just looked at equivalent prices, and there was not much difference. Actually ADR sometimes cheaper.
https://www.shell.com/investors/share-price-information.html
We can't buy the shares in Europe anyway.


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## agent99 (Sep 11, 2013)

There are a number of ASX stocks that are interlisted with Canadian exchanges. You can find them here:

https://www.tmxmoney.com/en/research/interlisted.html

Not sure is any Canadian brokerages would allow you to buy on C$ side then sell on A$ side so as to generate Australian currency. (As we can with stocks interlisted with US)


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## gardner (Feb 13, 2014)

agent99 said:


> There are a number of ASX stocks that are interlisted with Canadian exchanges.


I had no idea. Thanks for mentioning this.

But the ASX ones all look like junior minerals/mining/exploration that I wouldn't touch with a barge pole. I could picture owning a combo of BHP, Telstra and ANZ Bank (say) but it would be precisely this bilge of risky junior mining junk I would want to be excluding, otherwise EWA would be ideal as far as I can see.


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## agent99 (Sep 11, 2013)

gardner said:


> I had no idea. Thanks for mentioning this.
> 
> But the ASX ones all look like junior minerals/mining/exploration that I wouldn't touch with a barge pole. .


I agree. Only mentioned them because OP seemed to be interested in reducing FX costs by using a gambit to generate Aus$ . Don't know of a way to do that for AUS$, at least using BMOIL.


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## Fain87 (Jan 20, 2018)

agent99 said:


> Not sure exactly what you meant. Could be that buying OTC could be more expensive, but I have no experience with that.
> 
> With ADRs, I have not noticed any difference. ADRs are really a separate type of security, but based on an underlying stock. For example, one I own is Royal Dutch Shell. The ADR actually represents two shares. I just looked at equivalent prices, and there was not much difference. Actually ADR sometimes cheaper.
> https://www.shell.com/investors/share-price-information.html
> We can't buy the shares in Europe anyway.


Spreads are alot higher generally on ADRs a lot of the time than on the home market. It's almost always better to purchase on the international market rather than the ADR.


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## agent99 (Sep 11, 2013)

Fain87 said:


> Spreads are alot higher generally on ADRs a lot of the time than on the home market. It's almost always better to purchase on the international market rather than the ADR.


How would an average Canadian investor buy say, RIO TINTO or Unilever or Royal Dutch Shell or SASOL as examples on International market without using ADRs?


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## l1quidfinance (Mar 17, 2017)

agent99 said:


> How would an average Canadian investor buy say, RIO TINTO or Unilever or Royal Dutch Shell or SASOL as examples on International market without using ADRs?


Set up an account with Interactive Brokers. Access the relevent market and currency directly. 

If you are serious about it then this is the only cost effective way that I see to access these markets. 

$6AUD minimum to trade Australian stocks
£6GBP Minimum to trade UK stocks for example. 

However for the issues you mention the ADR's would be perfectly acceptable and have the advantage that you can hold them in a TFSA and avoid taxes completley as the UK will not withold taxes. 
If buying Royal Dutch Shell be sure to buy RDS.B that is subject to UK law. 

RDS.A is Dutch and will have witholding taxes applied.


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## gardner (Feb 13, 2014)

l1quidfinance said:


> hold them in a TFSA and avoid taxes completley as the UK will not withold taxes


True... but we were talking about Australia. Oz as a 30% no-tax-treaty withholding on dividends and this would be totally non-recoverable inside a TFSA. Non-registered, you might get half back as a foreign tax paid credit. It is quite possible Canada has a tax treaty with Oz that would bring this to the recoverable 15% level -- I'm not sure.

https://seekingalpha.com/article/248039-withholding-tax-rates-by-country-for-foreign-stock-dividends
http://www.austexpatinvestor.com/non-resident-withholding-tax/


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## l1quidfinance (Mar 17, 2017)

gardner said:


> True... but we were talking about Australia. Oz as a 30% no-tax-treaty withholding on dividends and this would be totally non-recoverable inside a TFSA. Non-registered, you might get half back as a foreign tax paid credit. It is quite possible Canada has a tax treaty with Oz that would bring this to the recoverable 15% level -- I'm not sure.
> 
> https://seekingalpha.com/article/248039-withholding-tax-rates-by-country-for-foreign-stock-dividends
> http://www.austexpatinvestor.com/non-resident-withholding-tax/



If the Australian ADR's have fully franked dividends then there is no witholding tax applied either. So you need to look at the Australian stock to verify the composition of their dividends. 

Soure : The Austrlian government

https://www.ato.gov.au/forms/you-and-your-shares-2013-14/?page=14



> Franked dividends
> If you are a non-resident of Australia, the franked amount of dividends you are paid or credited are exempt from Australian income and withholding taxes. The unfranked amount will be subject to withholding tax. However, you are not entitled to any franking tax offset for franked dividends. You cannot use any franking credit attached to franked dividends to reduce the amount of tax payable on other Australian income and you cannot get a refund of the franking credit. You should not include the amount of any franked dividend or any franking credit on your Australian tax return.


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