Want to invest in stocks like GOOGL or AAPL? Here’s everything you need to know about buying stocks from international brokers.
Why buy international stocks?
a) Potentially better gains
The Malaysian stock market has been one of the worst performing markets in Asia. If you had invested in the KLCI (the index that tracks the 30 biggest Malaysian companies) since 2018, you would have lost an average of 4.4% a year.
On the other hand, international stock markets have performed much better. For example, the world’s biggest stock market index, the S&P 500, which tracks the 500 biggest American companies, generated an annualised return of 12.69% in the past 5 years.
Even when considering a longer time span of 2010 to 2019, many international stock markets have performed better than Bursa Malaysia.
b) Hedge against ringgit depreciation
The ringgit has seriously depreciated over the past decade. In December 2011, US$1 equaled RM3.18. Today, US$1 equals approximately RM4.69. This means that the ringgit is now worth less, making imported goods or overseas travel more expensive.
If your investments are mostly held in ringgit or invested in Malaysian assets, this means that the value of your portfolio would fall if the ringgit depreciated further. Having assets held in other currencies can protect you against depreciation. But remember that this works both ways – if the ringgit appreciates against other currencies, then your portfolio might be worth less in ringgit.
Tax implications of buying US stocks
As a non-US resident, your US stock dividends will be subject to a 30% withholding tax. So for every US$1 dividend you receive, you’d really only get US$0.70.
Some investors get around this by investing in Ireland-domiciled exchange traded funds (ETFs). This takes advantage of the US/Ireland tax treaty, which only imposes a 15% tax on dividends. If you’d like to invest in Ireland-domiciled ETFs from Malaysia, you’d need to find an international broker with access to the London Stock Exchange.
Brokers regulated by the Securities Commission Malaysia
Some of the biggest foreign brokers are not regulated by local regulatory authorities in Malaysia.
In fact, TD Ameritrade, eToro and Tiger Brokers are on the Securities Commission Malaysia’s (SC) Investor Alert List, which identifies unauthorised platforms. The SC advises investors not to invest with any platforms that aren’t licensed or approved. It has warned that dealing with unlicensed or unauthorised entities can expose you to risks like fraud or money laundering.
But being on the Investor Alert List doesn’t necessarily mean that a platform is fraudulent. While these platforms aren’t regulated in Malaysia, they are usually regulated by international regulatory authorities, or by the national regulatory authority in the country it operates in. For example, TD Ameritrade Singapore is regulated by the Monetary Authority of Singapore, while its international counterpart is regulated by the Securities and Exchange Commission (SEC) in the US.
There’s just one downside – if you have a dispute with any of these platforms, you won’t be able to resolve it by going through the SC in Malaysia.
Update: In the past two years, several local and foreign stock brokers have gained licensing approval from Securities Commission Malaysia after meeting local compliance regulations.
International brokerage comparison
So which broker should you go with? Here’s a list of how some of the top brokers compare.
Brokers licensed by Securities Commission Malaysia:
| Platform | Year est. | Markets covered | Trading fees | Investment products | Min. balance to open account | Regulation | Fractional shares |
| FSMOne | 2000 | SG, HK, US, CN, MY | 0.05% - MY 0.08% - SG, US, CN, HK | Unit Trusts, Stocks, ETFs, Bonds, Managed Portfolios, and Insurances | RM100 | SG, MY | Yes |
| Rakuten Trade | 2017 | US, HK, MY | MY: RM1 - RM100 US: US$1.88 - US$25 HK: HKD35 | Stocks, Company Warrants, Structured Warrants, ETFs, REITs | US$0 | MY, JP, US, UK | Yes |
| Moomoo | 2018 | US, MY | 0 commission* to trade Malaysia & US stocks, ETFs US stocks: USD 0.99/order MY stocks: RM3/order | Stocks, ETFs, Warrants and REITs Securities, Derivatives Trading | US$0 | US, AUS, SG, CN, MY, HK, CA, JPN | Yes |
| M+ Global | 1963 | HK & US | 0.05% per contract or minimum brokerage at RM8, whichever is higher Commission charge as low as US$ 3.00 | Stocks, ETFs, warrants, Callable Bull/Bear Contracts, Odd-lot shares trading | US$0 | MY | No |
Foreign brokers not licensed by Securities Commission Malaysia:
| Platform | Est. | Markets covered | Trading fees | Investment products | Min balance to open account | Regulation | Fractional shares |
| Charles Schwab | 1971 | US | 0% for online-listed stocks and ETFs | Stocks, ETFs, mutual funds, bonds, fixed income, options, futures | US$25,000 | US | Yes |
| Interactive Brokers | 1978 | 30+ countries | Tiered - 0% commission for US ETFs - stocks: min US$0.35 per order Fixed - 0% commission for US ETFs - stocks: US$ 0.005 per share, min US$1 per order | Stocks, options, futures, ETFs, warrants, currencies, metals, indices, fixed income, mutual funds | US$0 | US, UK, CA, HK, SG, IE and others | Yes |
| Saxo Markets Singapore | 1992 | 36 exchanges | - Fees differ based on market - US stocks: 0.06% (min US$4) | Stocks, ETFs, bonds, mutual funds, currencies, CFDs, commodities, futures, crypto | S$3,000 | Denmark, UK, SG, AUS, HK | No |
| TD Ameritrade Singapore | 1975 | US | 0% commission for US stocks and ETFs | Stocks, ETFs, options, futures | US$0 | US, SG | No |
| eToro | 2006 | 17 exchanges | 0% commission for US stocks | Stocks, ETFs, commodities, currencies, indices, crypto | US$50 | Europe, AUS, UK | Yes |
| Tiger Brokers | 2014 | US, HK, SG, CN, AU | US$0.01 per share (min US$1 per order) | Stocks, ETFs, mutual funds, options, warrants, futures | US$0 | US, SG, NZ | No |
| TradeStation Global | 1982 | 18 exchanges | US$0.07 per share (min US$1.5 per order) | Stocks, ETFs, futures, currencies | US$1,000 | UK | No |
| XTB | 2002 | Over 2,100 markets | Standard account - No charge on execution commission but trades on slightly wider spreads Pro account - Charge commission for every trade but you are trading on market spreads | Stocks, ETFs, commodities, currencies, indices, crypto, CFDs | US$0 | UK | Yes |
| Capital.com | 2016 | Over 3,700 markets | No charges on: - Opening an account - Inactivity fees - Commission - Currency conversion - Funding and withdrawal | Stocks, forex, indices, commodities, crypto, ESG | US$20 | EU, UK, Cyprus, Australia, Seychelles and Bahamas | No |
To open an account with these brokers, visit their websites and register online. They will typically ask you for proof of your identity (passport, driver’s license, national ID, etc.) and proof of address (mortgage statement, utility bills, etc.).
How do some foreign brokers charge zero fees?
If you’ve glanced through the table above, you may have noticed that some foreign brokers charge zero fees. How do they do that? Generally, a few ways:
- Interest returns. Your broker may invest or loan out your uninvested assets.
- Payment for order flow. When you buy or sell shares, your broker may not actually execute the trade themselves. Instead, they route it to a different firm who processes the transaction and pays your broker a fee.
- Selling your data. Your broker may collect data on you – such as what banks you use or how much you earn – and sell that to others who want to market financial products to you.
How to fund your account
Funding an international brokerage account can be tricky, as your broker may not accept funding in ringgit.
a) International transfer from a Malaysian bank
You can still fund your account directly by setting up an international transfer from your local bank. But this can be expensive as you’ll incur international transfer and currency conversion fees.
b) Through an international transfer provider
Instead of going through your local bank, you could use a transfer provider like Wise or Instarem, which usually have cheaper transfer and currency conversion fees than banks. But not all brokers may accept a transfer from a third-party provider.
c) Open a Singapore bank account, then do an international transfer
You could also save on transfer fees by making an international transfer from a Singaporean bank account. That’s because international brokers may accept funding in SGD. If you have a CIMB Malaysia bank account, you can actually open a CIMB Singapore account directly online, fund your account through Wise or Instarem, then make an international transfer to your brokerage account.
What if you don’t want to go through international brokers?
If you want to invest in overseas stocks but don’t want to go through an international broker, you have a few options:
- Through a local broker. You can still buy international stocks through a local broker like Maybank or Public Bank, but they may charge you US$25 per transaction.
- Through Malaysian-listed ETFs. You can invest in Malaysian ETFs that invest overseas. These ETFs can be bought through a local broker.
- Through Malaysian-listed unit trusts. Some unit trusts invest in overseas assets. You can invest in these unit trusts through a fund management institution, like Public Mutual, or an online platform like FSMOne.
- Through robo advisors. Robo advisors automatically help you set up an investment portfolio. Most robo advisors invest in ETFs that are globally diversified.
If you’re having trouble choosing between these options, you could consider the features that are important to you. For example, investing in ETFs tends to be the most cost-effective option. Robo advisors, on the other hand, are more beginner-friendly. But if you want more flexibility, you can invest in individual stocks directly with a local broker – just be mindful of the fees.
This article has been updated on June 7, 2024.
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