EASYEQUITIES LAUNCHES US OFFERING
South Africans will be able to access the S&P 100, Nasdaq 100, Dow 30 and top 50 exchange-traded funds. But while holding Facebook and Google stock may sound like a good idea, there’s risk involved with Donald Trump’s volatile presidency, writes
If you’ve always wanted to invest in US stocks and shares like Facebook, Google or Apple, then you’re in luck because online stock broker EasyEquities is going to offer South Africans the ability to do this via its platform towards the end of July.
To create some hype and to test the system, EasyEquities will give investors the ability to play with “Monopoly” money in the form of a soft launch on July 4, which is Independence Day in America. Investors will also be given the opportunity to say what they like about the offering and which shares they are most interested in purchasing.
Upon launch investors will be able to buy into all the major US “stars”. “For starters investors will be able to access the S&P 100, Nasdaq 100, Dow 30 and top 50 exchange-traded funds. There are 7 000 stocks in the US, but we don’t want to introduce too many to confuse investors. However, all the big brands and disruptive companies like Facebook, Google, Apple, Nike and Adidas are in there in the top list,” explains Charles Savage, CEO of EasyEquities.
He adds: “Being able to access those brands and those company’s fortunes will be great opportunities for South African investors. There are other interesting brands in the US such as Alibaba, who are the Amazon of the Asian market, and other disruptors that you wouldn’t otherwise be able to access in South Africa. While there are a good few companies on our exchanges here there are few that are disruptors. All these US brands are synonymous in our daily lives, so it will be nice to share in their success.”
YOU MAY HAVE US EXPOSURE ALREADY
However, Floris Slabbert, Ecsponent national distribution manager, advises investors not to expose themselves too much to overseas stocks, pointing out that you could already have foreign exposure without even realising it.
“The companies that you are investing with locally could have international exposure either in Europe, on the FTSE in UK, or in America. With Naspers, you do have international exposure as it has a stake in Tencent in China. With stocks like British American Tobacco (BAT) you’d have a lot of exposure to America and Britain,” he says.
Alex Funk, CEO of Cinnabar Investment Management, concurs, adding that over half of the Top 40 stocks on the JSE are dual listed, which means you are earning dividends in dollars. “Similarly, 35% of the companies in the property index have their main listing offshore, with an inward listing on the JSE. In other words, these onshore investments are in effect rand hedges because their income is earned offshore,” he says.
THE TRUMP FACTOR
President Donald Trump has already said and done things that have had a direct impact on the value of shares listed in the US. So while holding Facebook and Google stock may sound like a good idea, there’s risk involved.
“Just to give you an idea, there was a pre-crash of almost 8% on one day when he did his first executive order on banning people from some countries from coming in and out of the country,” points out Slabbert. As a result of Trump’s actions, Apple’s and Google’s CEOs had to distance themselves. Investment guru and Berkshire Hathaway CEO Warren Buffett refuted Trump’s immigration policy in his annual letter to investors. “If Trump goes to war it could have a big impact on all of the stocks, and by the time you’ve woken up from your sleep you could lose out, so don’t overexpose yourself. Bear in mind that there may also be cheaper stocks locally,” says Slabbert. While some US stocks can be expensive, the EasyEquities platform provides the option of buying fraction shares through EasyEquities. “The average South African can’t buy Amazon at $900 (close to R11 800) but at $10 (R130.77) they can,” says Savage. Overall, Slabbert believes US stock offering presents a good opportunity. He advises investors not to put all their eggs in one basket and invest for the long term to ride out any volatility, which is bound to occur considering Trump is at the helm.