Bellow list of advices for the “amateur” investor who wishes to start trading with Asian corporations.

1. Look after all Asian Economies; pick the right sectors and industries

First, select and focus on one or two industries. Regularly, browse the websites of national English newspapers to have a better idea:

China: Shanghai News - China Daily
HongKong: South China Morning Post - The Standard
India: Business Standard - The Economic Times
Indonesia: Jakarta Post - Tempo interactive
Japan: The Japan Times - Japan Marketing News
Malaysia: The Edge - Business Times
Taiwan: Taipei Times - China Post
Thailand: Bangkok Post - The Nation
Vietnam: Saigon Times - Vietnam News

Overall: The Wall Street Journal - Asia Edition & The economist

2. Be aware of laws and regulations

Some Asian market regulations have weaker rules than you might have in your home country (i.e: accounting standards, corporate governance). Additionally, corruption and fraud is still actual and less “looked after” in emerging markets.

3. Now, the first choice should be for Asia’s larger markets

HongKong, Shanghai, Singapore, Tokyo - NewYork, London for GDR’s.

4. Second choice is for secondary listings in London and New York

American Depositary Receipts (ADR’s are traded in US dollars, pay dividends in US dollars) and similarly, GDR’s stands for Global Depository Receipt (used in all countries outside the USA). Secondary listings are a wise choice to investors willing to buy Asian stocks since you can invest in Asian companies without going through local rules. Their price levels fluctuate according to demand and supply, as well as the “actions” taken by the underlying company; behaving like regular stocks.

BNY Mellon has an exhaustive list: Go

5. Consider Smaller Corporations

Good investment opportunities can come from company’s you would not know or think of in the first place.
A good strategy is to look for the next “hit” consumer product to be launched by a big multinational; then, find out which company (usually outsourced) manufactures the product or key components. Do your background analysis and if you invest, it is very likely that you will get more “bang for the buck” investing in this “smaller company”. In fact, the return on investment (of the new product) will have a more significant impact on the “bottom line” of the smaller company than the bigger one, thus giving your investment a higher return.

6. Think about exchange traded funds (ETF’s) and mutual funds focused on Asia.

ETF’s offer greater flexibility than mutual funds when it comes to trading (i.e.: can be bought and sold throughout the day like stocks). Additionally, ETF’s have lower sales and annual charges; thus being the better option if you want to invest in a market quickly and cheaply.

Mutual funds however (which transactions occur at the close of the market), employ full teams of analysts and strive to outperform a certain benchmark. Often, mutual funds would require a minimum investment to “buy in”, which can make them less attractive to the “amateur investor”.

There are funds that focus on one or include several Asian nations (you can find some on “http://www.fundsupermart.com” - select your market and click on “funds info” and “funds selector”).

7. Watch out for “odd lot” rules.

In some Asian markets (like Hong Kong), you might be required to pay higher fees if you sell or buy “odd lots”. An odd lot occurs when you sell or buy less than the “board lot”, for instance, you buy 478 shares when a company trades in lots of 500 (the” board lot”).

Finally, you should always asses all sides and final decisions of an investment yourself. No matter what you hear on “CNBC, Bloomberg”, read in newspapers/books, when it comes to place your hard earned money, trust no one but yourself. Do your homework and if you think it’s worth it, go for it!

Next week I'll be going into more details on how to actually start buying !

by A.S. Partner DragonGate.Asia