In the past, investors had the choice of investing in a foreign stock mutual fund, but they usually carry a hefty expense ratio; buying ADR, which are proxies for foreign stocks traded on U.S. exchanges; or trying to invest directly in foreign stocks.
Thanks to our global economy, more foreign stocks are listed on U.S. exchanges than ever.
Foreign Stocks
This allows U.S. investors direct access to these stocks without the immediate dangers imposed by currency fluctuations when trading in overseas’ markets.These are actual shares in the companies, for the most part, not proxies or derivatives.
One of the latest entries of foreign stocks to be listed on U.S. exchanges is numerous firms from China.
At War
Not too many years ago, we were on the verge of war with this county of a billion people and did fight them in Korea and indirectly in Vietnam.They have been a nuclear threat for many years and some feared them more than the Soviets, because we knew so little about them.
Well, it seems capitalism has caught hold in this once fiercely Communist country and it is competing on a global scale.
Chinese companies have been gaining listings on U.S. exchanges at an increasing rate.
Are these companies a good way to diversify outside the U.S. market?
Depends on Company
Of course, the answer to that question depends on the company, but there is no denying that the Chinese market is very interesting.As more Chinese companies enter the U.S. stock market, they will undergo more scrutiny from investment professionals. This will help everyone sort out potential winners and losers.
Until then, don’t focus all of your attention on China. Many other foreign investments will fit your needs, including major U.S. companies, such as Coke, that does 70 percent of its business overseas.
