Everybody wants themselves a little bit of Down Under – what’s there not to love, after all – it’s the sun, sea and mouth-watering seafood all a mere skip and hops away. Likewise, being a Singapore-based investor gives you simple and convenient access to nearly all Asian equity markets. If you are looking for a new region to invest your money, Australian equities can add some variety and diversity to your portfolio. Diversifying your investments can lead to higher returns in the long term.

If you are looking for a new region to invest your money, Australian equities can add some variety and diversity to your portfolio. Diversifying your investments can lead to higher returns in the long term.

What You Should know before buying Australian equities?

The Australian equity market has one dominant stock exchange – the Australian Securities Exchange (ASX).  The ASX is a very liquid market, which means there are lots of choices of different equities to buy and sell and lots of the various people for you to buy and sell with.   The normal trading hours are from 10 am to 4 pm Sydney time.

Remember that Australia is 3 hours ahead of Singapore. The ASX was first set up in 2006 but is now one of the largest stock markets in the world – within the top ten across the globe.

Getting started and purchasing equities in the Australia Market 

Once you have opened the two required trading accounts with your broker, you will be able to buy and sell Australian equities by notifying your broker that this is what you want to do. Depending on your broker there can be a small fee and an additional form to fill in the first time, but this is simple for the broker to arrange for you.  After that, it is just as quick and easy to buy Australian equities as it is to buy local Singapore equities.

How the Australia Market works

The ASX uses two trading platforms – ASX Trade, which facilitates the trading of equities and ASX Trade24, which is for derivatives trading. ASX Trade has a fixed trading day from 10 am to 4 pm Australia time, with a pre-open auction system to determine opening prices that run from 7 am to 10 am Australia time. However, the ASX Trade24 system operates 24hours a day – making it more convenient for global derivative investors.

Lot sizes in Australia Market 

For trading in the Australia market the minimum order size, lot size is one share.

Major Indices of the Australia Market 

The ASX has stock indexes for stocks traded on the exchange – which has been developed and set up to Standard & Poors. For example, the S&P/ASX 300 index is a market-capitalisation weighted index of Australian stocks listed on the ASX that includes all of the companies in the S&P/ASX 200 index (which covers the top 200 companies), with an additional 100 smaller companies. The constituents of the index are reviewed semi-annually, and the best way to invest in this index would be to buy a share in Vanguard Australia Shares Index ETF.  This is a simple and efficient manner to get a slice of the overall Australian stock market.

Sectors of Australia Market Exchange

The Australian stock market is classified into ten sectors: Consumer Discretionary, Energy, Financials, Health Care, Industrials, Information Technology, Materials, Consumer Staples, Telecommunication and Utilities. These 10 sectors cover 24 different industry groups. This means that there is a good variety of equities to invest in – take a look at the different sectors and what each one can offer you when choosing which equities to buy. For example, some sectors are better for long-term returns, while others are better for short term returns but will come with higher risks to your money.

What should you look out for?

The key difference for you when investing in Australian equities is the timing. Singapore is 3 hours behind in time compared to Australia. This means when it is opening time (10 am) in Australia, it will be 7 am in Singapore.  So if you wanted to follow the Australian equity market through the trading day, you might have to wake up earlier than usual.

Remember that there are risks involved in equity investing. If the company goes bankrupt, whether Australian or Singaporean, you risk losing the total amount you invested.  When investing in Australian equities keep in mind that your investment can be affected by Australia-based factors – such as the economic and political change in the region.

Keeping track of your equity portfolio

An important part of investing in the Australia market is the currency difference. You will be buying and selling equities in Australian dollars. Your broker will convert your Singapore dollars for you, but the rate is constantly changing. Keep a close eye on this exchange rate when making your investment choices – as this can affect how well your investment performs.

Monitor your equity portfolio carefully, and you are more likely to achieve higher returns on your investments. By checking all the incoming and outgoing transactions are correct as they take place you can focus more energy on researching your next investment idea – instead of wasting time later chasing up errors.

 

The New Savvy: Stock Markets

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C.E.O @ The New Savvy
Anna Haotanto is passionate about finance, education, women empowerment and children’s issues. Anna has been featured in CNBC, Forbes, The Straits Times, Business Insider, INC and The Peak Singapore. She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen). Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).