Global exchanges open to SA investors

Johannesburg - Two local online stockbrokerages - Sanlam iTrade and PSG Online - have opened their platforms to transactions on international exchanges.

In the past local investors have been able to use part of their foreign exchange allowance to buy equities through stockbrokers who had international joint ventures, but the process tended to be cumbersome and did not lend itself to day trading.
 
This, however, has changed with the announcements from PSG Online and iTrade. Other big name retail brokers can be expected to follow shortly. This opens up another 15 to 20 global exchanges, where investors can buy shares and exchange-traded funds (ETFs).
 
"Currently South Africans can invest up to R4m offshore, but there is very little stopping government from lifting these controls on individuals as very few people made use of this allocation," said iTrade head Gerhard Lampen, speculating on further exchange control relaxation.
 
The benefit of investing in these stocks directly is that the investment would be priced in dollars, euros or pounds sterling. Investment return would not be as sensitive to the exchange rate as existing South African investment tools, ultimately still priced in rands.
 
However, one aspect which may continue to discourage international investors is the average deal size.
 
Lampen said the minimum investment size is $10 000, which translates into about R75 000. In PSG Online's case, the company said the majority of investors were making average investments of about R50 000 per trade, which could be out of reach for many retail investors.
 
 - Fin24.com