How to Buy Stocks of Overseas Companies

I would love to buy stocks of top overseas companies. Companies like Google, Microsoft, Apple are dream buys for any investor. The success story and growth prospects of these companies in United States are fantastic. How can we buy stocks of such fantastic overseas companies? I personally dream to buy GOOGLE stocks at undervalued price.

But I being an Indian, how can I buy stocks of Google and Facebook? Is there a way for resident Indians to buy stocks listed in United States. Yes there is a way. In this article we will discuss just that. When I look at the fundamentals of some American companies it generates mouth watering temptation to buy them. No its not impossible to buy these stocks.

There is a procedure in India that allows us to buy overseas stocks. It is also true that the procedure is not so easy. We will discuss here two ways; <>(1) A comparatively easy way and (2) A difficult way. For sure buying stocks of overseas companies is not as easy as buying stocks here in India. But we should be happy that at least it is possible. I was happy to find one and I would share it with you.

One can buy stocks of overseas companies by sitting in India. Use of online trading account operative in India can help purchase stocks of overseas companies. One day my brother asked me this question, “there are quality companies in India, why you want to buy overseas stocks?” My answer was simple, it will further diversify my investment portfolio.

And what better way to diversify than including Google’s and Microsoft’s in my portfolio. Diversifying with overseas stocks is ideal. India soon is going to be the third largest economy after America and China. Why India is so sure to take the third spot? Because the internal-demand in India alone can make it the world’s biggest economy. The fundamentals are in place, but India’s readiness to take that coveted spot of number three is not in place. At present India lacks both social and infrastructure ability to retain number three spot. India is gearing up for change. But the speed is slow and which further gets worse due to rampant corruption. India has some fast catching-up to do. Other emerging economies like China, South East Asia, South America, Russia, etc will soon push India out of the competition. Fear of loosing to competitors always exists. There will be both good days and bad days. Better strategy is to be ready for both. Investment diversification is one such wise step. Overseas companies will help give more stability of returns to investment portfolio.

Buy stocks of overseas companies using Mutual Funds

Through Mutual Funds it is possible to buy stocks of overseas companies. Such mutual funds which invests in overseas stocks are primarily funds of funds. These ‘funds of funds’ invests in those mutual funds which buy stocks of overseas companies. Though there are mutual fund companies which also buy overseas stocks directly but such funds are less. In India there are nearly 30 mutual funds which invests in overseas companies. Indian investors has still not matured enough to invest in such mutual funds. But the trend is growing. People are now opening-up and likes to increase their exposure to global markets. Government shall also take steps to encourage people to buy stocks of overseas companies. Presently returns of such funds are treated as returns of debt funds…………….hence taxable.

Mutual fund that Buy Stocks of Overseas Companies

SL Mutual Fund Scheme AUM (Rs. Crore) 1yr Returns 5yr Returns
3 Franklin Asian Equity Fund (G) 133.14 7.2 13.3 70.9
4 Birla SL Intl. Equity – B (G) 127.04 27.8 65.7
SL Mutual Fund Scheme AUM (Rs. Crore) 1yr Returns 5yr Returns
1 Motilal MOSt Shares NASDAQ 92.28 29.9
2 ICICI Pru US Bluechip Equity 206.81 22

Example1: Portfolio Holdings of Motilal Oswal MOSt

SL Overseas Companies %
54 OReilly Automotive 0.43
55 NXP SEMICONDUCTORS 0.42
56 Charter Communication-A 0.41
57 Ross Stores 0.4
58 Analog Devices 0.38
59 Seagate Technology 0.37
60 Keurig Green Mountain 0.36
61 Fiserv 0.36
62 Intuitive Surgical 0.35
63 Electronic Arts Inc Com 0.35
64 Paychex 0.34
65 Whole Food Market 0.34
66 Symantec Corporation 0.33
67 Sigma-Aldrich Corporation 0.32
68 Activision Blizzard 0.32
69 Dollar Tree 0.31
70 Check Point Software Technologies 0.3
71 Vodafone Group 0.3
72 DISH NETWORK CORPORATION 0.29
73 Sba Communications Corporation 0.29
74 SanDisk Corporation 0.28
75 CA 0.27
76 Autodesk 0.26
77 Akamai Technologies 0.26
78 Fastenal Company 0.25
79 Liberty Interactive Corporation 0.25
80 Liberty Global 0.25
81 Bed Bath & Beyond 0.25
82 Catamaran Corporation 0.24
83 Altera Corporation 0.24
84 NVIDIA Corporation 0.23
85 TRACTOR SUPPLY COMPANY 0.23
86 Verisk Analytics 0.23
87 Lam Research Corp Com 0.23
88 Henry Schein 0.22
89 Netapp 0.22
90 Stericycle 0.22
91 Xilinx 0.22
92 Citrix Systems 0.21
93 Wynn Resorts 0.21
94 Linear Technology Corporation 0.21
95 TRIPADVISOR 0.2
96 Staples 0.2
97 Vimpelcom 0.19
98 KLA-Tencor Corporation 0.19
99 Mattel 0.19
100 C.H.Robinson Worldwide 0.18
101 Discovery Communications C 0.17
102 Garmin 0.17
103 Expeditors International of Washington 0.17
104 Liberty Media Corporation – C 0.17
105 Liberty Ventures – Ser A 0.11
106 Discovery Communications 0.09
107 Liberty Media Corporation 0.08
SL Overseas Companies %
1 Microsoft Corporation 7.75
2 Amazon.com 3.84
3 Google -Class C 3.61
4 Facebook 3.47
5 Google 3.1
6 Intel Corporation 3
7 Gilead Sciences 2.94
8 Cisco Systems 2.86
9 Comcast Corporation 2.4
10 Amgen 2.35
11 QUALCOMM 2.18
12 Apple 14.44
13 WALGREENS BOOTS ALLIANCE INC WBA 1.78
14 Celgene Corporation 1.75
15 Biogen Idec 1.74
16 Starbucks Corporation 1.46
17 eBay 1.37
18 priceline.com 1.25
19 Mondelez International 1.23
20 Costco Wholesale Corporation 1.23
21 Express Scripts Holding 1.19
22 Baidu 1.17
23 Texas Instruments 1.11
24 Kraft Foods Group 0.96
25 Regeneron Pharmaceuticals 0.91
26 Twenty-First Century Fox 0.89
27 DIRECTV 0.88
28 Automatic Data Processing 0.78
29 Yahoo! 0.78
30 Adobe Systems 0.74
31 Cognizant Technology Solution 0.7
32 Alexion Pharmaceuticals 0.68
33 American Airlines Group Inc Com Usd1 0.66
34 Netflix 0.66
35 LIBERTY GLOBAL INC-C?W/I COM 0.61
36 Micron Technology 0.6
37 Avago Technologies 0.58
38 Vertex Pharmaceuticals 0.58
39 Tesla Motors 0.56
40 Mylan 0.54
41 Intuit 0.54
42 Twenty-First Century Fox – B 0.52
43 ILLUMINA 0.52
44 Viacom 0.49
45 Cerner Corporation 0.48
46 Broadcom Corporation 0.47
47 Applied Materials 0.47
48 PACCAR 0.45
49 Monster Beverage Corporation 0.45
50 Comcast Corp-Spec A 0.45
51 Marriott International -Cl A 0.45
52 Western Digital Corporation 0.43
53 Sirius Xm Holdings 0.43

Example2: Portfolio Holdings of ICICI Pru US Bluechip Equity Fund

SL Overseas Companies %
13 Exxon Mobil ORD SHS 3.97
14 Express Scripts Holding (US) 3.96
15 ITC Holdings Inc 3.96
16 Baxter International ORD SHS 3.92
17 Berkshire Hathway INC-CL B (US) 3.92
18 Oneok ORD SHS 3.84
19 Spectra Energy Corp 3.83
20 Williams Companies Inc. 3.82
21 Amgen Inc. 3.82
22 VF ORD SHS 3.77
23 Harley Davidson Inc. 3.76
SL Overseas Companies %
1 Taro Pharmaceutical Industries ORD SHS 5.04
2 Cognizant Tech Solutions Class A 4.97
3 Google Inc-CL A (US) 4.93
4 Hershey Foods Corp Com 4.64
5 Discovery Commun. ORD SHS Sr.A 4.63
6 Varian Medical Systems Inc 4.53
7 Twenty-First Century Fox Inc 4.53
8 US Bancorp Inc 4.46
9 Merck & Co. Inc. 4.43
10 American Express Co. 4.42
11 Polaris Industries Inc. 4.42
12 Franklin Resources (US) 4.01

Example3: Portfolio Holdings of Franklin Asia Equity Fund

SL Overseas Companies %
28 Citrip.Com (USA) 1.05
29 China Construction Bank (Hong Kong) 1.05
30 Cp All Pcl (Thailand) 1.02
31 LOccitane International Sa (Hong Kong) 0.97
32 7-Eleven Malaysia Holdings (Malysia) 0.96
33 Bec World (Thailand) 0.91
34 Major Cineplex (Thailand) 0.89
35 Techtronics Industries (Hong Kong) 0.86
36 Singapore Technologies Engineering (Singapore) 0.82
37 Bank Mandiri (Thailand) 0.81
38 Hyundai Dept Stores (South Korea) 0.77
39 Nestle (Malaysia) 0.77
40 Matahari Department Store (Indonesia) 0.75
41 Vipshop Holdings (Adr) 0.75
42 Simm Tech Co (South Korea) 0.68
43 Samsung C&T Corp (South Korea) 0.67
44 Mayora Indah (Indonesia) 0.66
45 Cheng Shin Rubber Industry (Indonesia) 0.63
46 Giant Manufacturing Co (Taiwan) 0.63
47 Nestle Lanka (Sri Lanka) 0.6
48 Gs Engineering & Construction (South Korea) 0.6
49 Jd.Com (Adr) 0.52
50 Flexium Interconnect (Taiwan) 0.52
51 Sapphire Technology (South Korea) 0.51
52 Formosa Plastic Corp. (Taiwan) 0.44
53 Samsung Sdi (South Korea) 0.38
54 Nexen Tire Corporation (South Korea) 0.27
SL Overseas Companies %
1 Taiwan Semiconductor Manufacturing (Taiwan) 7.1
2 Samsung Electronics (South Korea) 5.66
3 Aia Group (Hong Kong) 4.31
4 China Overseas Land & Investment (Hong Kong) 3.76
5 Ping An Insurance (Hong Kong) 2.87
6 Hong Kong Exchanges & Clearing (Hong Kong) 2.78
7 Tencent Holdings (Hong Kong) 2.68
8 Baidu Inc (Adr) 2.66
9 Meritz Fire & Marine Insurance (South Korea) 2.65
10 Shinhan Financial (South Korea) 2.49
11 Chinatrust Financial Holding Co (Taiwan) 2.28
12 Alibaba Group (Usa) 2.12
13 Dbs Group Holdings (Singapore) 1.95
14 Siam Cement (Thailand) 1.93
15 China Merchants Bank (Hong Kong) 1.78
16 Hyundai Motor Co (South Korea) 1.71
17 Bk Central Asia (Indonesia) 1.67
18 Singapore Exchange (Singapore) 1.57
19 Largan Precision (Taiwan) 1.56
20 Kasikornbank Pcl (Thailand) 1.47
21 Cognizant Technology (Usa) 1.45
22 Brilliance China Automotive (Hong Kong) 1.41
23 Siam Commercial Bank (Thailand) 1.32
24 Samsonite (Hong Kong) 1.32
25 Silergy Corp (Taiwan) 1.17
26 Surya Citra (Indonesia) 1.11
27 China Resources Land (Hong Kong) 1.08

Example4: Portfolio Holdings of Birla SL International Equity Fund

SL Overseas Companies %
1 McKesson Corp 1.55
2 Cognizant Technology Solutions Corp 1.41
3 Aetna Inc New 1.39
4 APPLE INC 0.93
5 FEDEX CORP 0.88
6 AXA SA 0.82
7 EXPEDIA INC 0.8
8 VALERO ENERGY CORP 0.77
9 NEXT PLC 0.74
10 The Boeing Co 0.72
11 Japan Airlines Co Ltd 0.72
12 Delta Air Lines Inc 0.71
13 Zurich Insurance Group Ag 0.71
14 Westfield Corporation 0.69
15 TELENOR 0.69
16 Telstra Corporation Ltd 0.69
17 HARMAN INTERNATIONAL 0.68
18 T ROWE PRICE GROUP I 0.67
19 Koninklijke AHOLD NV 0.67
20 AMERISOURCE BERGEN CORP 0.67
21 GILEAD SCIENCES INC 0.66
SL Overseas Companies %
22 CLP Holdings Ltd 0.64
23 MARKS & SPENCER GROUP PLC 0.63
24 SANOFI 0.63
25 EMC CORP 0.63
26 NORDEA BANK AB 0.63
27 PING AN INS GRP-H 0.62
28 EASTMAN CHEMICAL CO 0.62
29 SWISS RE AG 0.62
30 INTERNATIONAL BUSINESS MACHINES CORP IBM 0.56
31 Allianz SE 0.54
32 CVS CAREMARK CORP 0.54
33 Vivendi SA 0.51
34 TOYOTA MOTOR CORP 0.46
35 Michelin Cie Generale Des Etablissements 0.43
36 XEROX CORP 0.43
37 HEWLETT PACKARD CO 0.43
38 CenturyLink Inc 0.42
39 Viacom Inc 0.41
40 BEIERSDORF AG 0.29
41 TECK Resources Ltd 0.2

Buy stocks of overseas companies using online trading account

In India there are only handful broking houses which allows the option of overseas trading. The broking houses are ICICI Direct, India Infoline and Kotak Securities, Religare and Reliance Money. These Indian broking houses has basically tied-up with broking houses of overseas countries. This collaboration provides direct share trading platforms to Indian investors. What you need to do is to approach Indian broking houses like ICICI Direct. Fill few forms and your online trading account will be live. While opening trading account it needs to be specified in which countries one is interest to buy stocks. The filled up forms is forwarded to the broker of that country for registration. Once the process of registrations is done stocks of that is ready to be bought. A bank account also must be opened in considered overseas country. Online trading account with a foreign bank . In order to transfer funds to your trading account/bank account, you need to fill out a form called as “A2” form. By filling this form you are transferring funds from your Indian bank to the foreign bank. These funds will them be used to buy shares in that country. The money will be sent to your foreign bank account wire transfer which itself takes two days for settlement.

Rest other processes of shares buy and sell is same as that we do in India. Placement of buy order using your online trading platform is same. Difference between indigenous share trading and overseas share trading lies mainly in demat account. For indigenous purchases your shares are credited to your demat account but in overseas trading these shares are accounted in a pool account. This pool account is managed by your foreign broking house. All overseas stocks that you are holding will become visible in your trading account. If one wants to sell their shares holdings, then from the pool account the shares are made available for trading and after they are sold, the money takes nearly 3 days to get credited to your bank account.

If you will ask me, this procedure of trading in overseas stock is fantastic. I used to consider initially that I may not be allowed to buy overseas stock. So from this impossible situation, now when I see that I can trade shares in overseas company, I am actually ecstatic.

Overseas trading account has one drawback, there is a minimum cap for initial deposit that can use for trading international shares. For Kotak Securities and India infoline this amount is Rs 5 lakhs. These two trading account provides a wide coverage of international stock compared to other broking houses. For ICICI Direct and Reliance Money the initial deposit is only $1000 but they are limited to trading in only US stocks. There are also account opening fees of approx. Rs 1000 for all trading accounts.





Thanks for reading my blog. I really appreciate your time. If you can also put your comments or subscribe us below, it will be an excellent feedback for us. Please also consider sharing posts of getmoneyrich on facebook or twitter.....You are awesome!

Disclaimer: All blog posts of getmoneyrich.com are for information only. No blog posts should be considered as an investment advice or as a recommendation. The user must self-analyze all securities before investing in one.

About the Author

Mani
I am a Blogger with a passion for investment education. I started blogging in 2007-08. Blogging didn’t happened to me as a coincidence, it was a conscious decision. The idea with which I started blogging still stands true. In my starting days my finances remained tight. I was reading heavily about how to manage finance. One day I got hold of a book which my father gifted me in 2003. It was stacked below my graduation books. It was a small-thin book with its cover named "Rich Dad Poor Dad".....more

6 Comments on "How to Buy Stocks of Overseas Companies"

  1. I jhst like the valuable info you provide in your articles.
    I will bookmark your blog and take a look at again here regularly.

    I am rather certain I will be informed lots of
    new stuff proper right here! Best of luck for the next!

  2. Indian government(RBI) banned to open a new overseas trading account for its residence Indian citizens a few months back. I don’t know the recent updates.

    If it is allowed now, please tell me any one is providing overseas trading account in currency derivatives ( OPTIONS & FUTURES).

    Thanks

  3. As of for now, none of the brokerage firms like ICICI Direct, kotak securities, religare, Indiainfo online, or reliance money facilitate overseas trading account. I would like to know if there are any more firms that lets Indian citizen to buy foreign shares. Thank you.

    Mandar

  4. One needs to be aware of tax implications. You may need to start filing tax returns in US (if you are trading in NASDAQ or NYSE). This is one headache that needs to be kept in mind. Although the ICICIDirect rep told me that we need not pay tax as we are foreigners, i do not beleive that.

Leave a comment

Your email address will not be published.


*