Trading $ 236b
Samsung’s market capitalisation
ols, an international telecom equity analyst at Morningstar who covers the company. Even so, there are reasons why small investors might take the risk and buy Samsung over- thecounter shares rather than go to the home market of an overseas company. Some brokerages require a minimum purchase of $ 5,000 or more to place trades on a foreign market and an investor also has to wait until that foreign market opens.
Investors who want to take smaller positions could consider the over- the- counter shares, said John Wightkin, director of equity research applications at Charles Schwab.
The cost to buy companies listed on the Pink Sheets tends to vary, based on an investor’s account size and trading frequency. And investors would not be able to trade those shares on the South Korean market.
Larger investors, meanwhile, might want to opt to buy foreign shares directly in the target company’s home market because of the liquidity.
While brokerage houses such as Schwab are expanding services that allow retail investors to trade international stocks directly in local markets, South Korea is typically not among the offerings. Instead, customers must place orders through brokers, meet minimum order sizes and pay additional fees that can include exchange fees, foreign currency fees and local tax withholding. Customers typically cannot trade on margin and must trade during foreign market hours as well.
Another, albeit watereddown, option for investors is an exchange- traded fund such as the $ 3.4 billion iShares MSCI South Korea Index fund, which has 21.5 per cent of its assets invested in Samsung, according to Morningstar. Its next largest position is in Hyundai Motor Co, with 5.3 per cent of assets.
The fund, which charges 61 cents per $ 100 invested, has an average volume of 2 million shares traded and a bid/ ask spread of 2.1 per cent, according to Morningstar.