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MONEY MONITOR | JULY 1998 |
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A Cyber-Trader's Guide By CRISTINA HILSENRATH
Trading on the Internet offers convenience, access to global markets and loads of information to make educated choices. From almost any Internet trading site you can get stock picks, analysis and financial and corporate news. The World Wide Web also offers privacy; if you're at work, you don't have to whisper over the telephone to your broker. What's more, it is pressure free. You are not relying on the suggestions of someone who may have a financial incentive to push a particular product. Trades can be faster because they go directly from your computer to the dealing floor, cutting out the middleman. And they are often cheaper, especially for foreign stocks. Investors can now tap into more than a hundred online trading sites. Some of them are large U.S. players, like discount brokerage Charles Schwab, which estimates that more than 70% of its Asian customers trade online, compared with just 30% in the U.S. Schwab offers online investors the chance to buy and sell U.S. stocks, bonds, treasury bills--anything that is traded on a U.S. exchange. Schwab also offers 200 Hong Kong-registered mutual funds. Other sites call Asia home, like Boom, which launched its Hong Kong-based service in March. Boom, which has English- and Chinese-language sites, lets you trade stocks listed on the Hong Kong exchange. The Development Bank of Singapore's online trading site allows customers to buy and sell securities in six Asian countries--Singapore, Malaysia, Hong Kong, Thailand, Indonesia and the Philippines--as well as in the U.S. DBS has linked its banking and trading operations, making it easy to transfer money between accounts. A few places in Asia, including Malaysia, still restrict trading through brokers on the Net. But some local banks in Malaysia and the Philippines have set up services that allow customers to trade electronically through the banks' own systems. In Taiwan, the government allowed Internet trading this year, and several brokerages have opened up sites. Commissions on the Net can be as low or lower than conventional brokerage fees. Boom charges a US$25 annual fee and 0.25% of the transaction amount on trades, with a minimum of $20. That's the lowest rate allowed in the Hong Kong market, where live brokers charge 0.25% to 0.5%. Trading U.S. stocks on Internet sites can be an even bigger bargain. E*trade, for example, charges $15 per stock trade, compared with conventional brokers whose commissions start at $39. You pay $8 per transaction at Suretrade, Ameritrade and others and as little as $5 at no-frills Brown Co. By comparison, Schwab charges $76 plus 0.34% of the transaction amount on U.S. stock trades of $6,250 to $19,999. While its commission on stock trades is steep, funds at Schwab are a steal. More than 21% of the 200 funds Schwab offers are no-load--that is, commission-free. For most of the rest, the commission is 2%, three percentage points lower than funds bought through a regional bank or live broker. While DBS charges standard brokerage fees, it imposes a high annual fee of $179. The firm justifies this by pointing out that it offers customers a cornucopia of high quality research and information. "We have a team that rewrites financial data into a form understandable by the man on the street, and we pass it along to the website," says Marcus Uy, business development executive at DBS. Still, lower-cost trading sites generally offer user-friendly financial information or links to sites that can deliver it as needed for a reasonable fee. One free source of such information is Interactive Investor International. It's not an online broker; you have to make your trades on another site. But it offers free fund performance information, often in both Cantonese and English, for around 6,000 funds, including Hong Kong-approved ones. It also offers stock quotes from the New York and Hong Kong exchanges and financial news in Cantonese and English. One key feature of the site is free portfolio tracking. You plug in the stocks you own, and the site updates the value of your holdings every time you log on. There are many free sites offering information on the U.S. market. One in particular, Inverstorguide, has links to more than 7,000 investing-related sites providing fund research, technical analysis and strategies. After an order is placed on the Internet, much of the deal takes place through traditional mechanisms. Payment, for instance, is sent by post or wire. To allay security concerns, most online firms require customers to enter three different passwords before a trade is executed. But investors should check with securities regulators in their country to ensure they're dealing with reputable online trading companies.
SITES TO START WITH
Hong Kong market
Taiwan market
U.S. market
Global
Investment information
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hen Sunil Handa wanted to place a bet on Hong Kong's Ka Wah
Bank, he turned to his computer instead of his broker. This Hong
Kong-based pharmaceutical company executive has been investing
for more than seven years, but for the last nine months he's
been doing it over the Internet. "It's one place you do your own
research, don't have to talk to people and are guided only by
what you think is right," Handa says of Internet trading. "It
breaks time barriers. You can trade anywhere in the world, as
long as you have a computer and the market is open."