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What is the difference between buying ADRs and ordinary shares of companies listed on foreign exchanges?
I’d like to buy shares of companies listed on the Hong Kong and Singapore stock exchanges. What is the best way to do this? Almost all of the Hong Kong and Singapore ADRs are traded over-the-counter (sponsored and unsponsored). The companies with sponsored ADR programs provide info on their websites, which makes me feel a little more at ease. However, I’m concerned about liquidity and the ask-bid spread. Would it be better to buy pink sheet ADRs (sponsored and unsponsored) over-the-counter or ordinary shares listed in Hong Kong? I heard it’s much more expensive to buy shares on foreign exchanges for obvious reasons. I’m interested in buying conglomerates, not penny stocks. Also, why do some pink sheet stocks end in Y and others F? What’s the difference?
I think those ending in Y are ADRs and those ending in F are ordinary shares. I think. I think if you were to open an account with Fidelity and deposit sufficient funds, you can buy shares on the Hong Kong exchange. Not Singapore. Interactive Brokers also. No Singapore.
If you place a limit order for the pink sheet ADRs you might avoid the bid/ask spread game. That is what I do although I do not trade extensively on pink sheets. ADRs are traded in dollars. If you trade on the local markets you have to go through a currency conversion both ways–additional cost for you. Your dividends will be in the local currency also, another conversion. I might mention that there is native stock (non-adrs) sometimes also traded on the pink sheets. I believe those are the ones ending in F. For example PBMRF are the ordinary shares of PT Bumi and PBMRY are the ADRs of PT Bumi. There is actually more of a market for the ordinary shares than for the ADRs. The ordinary shares are traded daily. The ADRs do not have much volume.
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