In my previous post, I mentioned that I am looking for a broker so that I can trade US and Hong Kong Stocks with no holding fees.
Why look for a broker now?
Now, before I continue, just to clarify…
I currently only have 1 counter which is a non-Singapore market listed stock: Fu Shou Yuan International Group Limited. It is listed on the Hong Kong stock market. This counter only occupies a tiny portion of my stock portfolio.
Well, FYI, in recent times, I always felt that market valuations are either fully or richly priced. Yes, there are pockets of opportunities here and there, but overall, I don’t see the need to invest a lot at the moment.
Nevertheless, recently I did make some buy moves for some Singapore listed stocks (read here).
So why bother (to find a broker to trade US and HK stocks) you might ask. Well, for one I can never predict when opportunities will come knocking. It could be months or years before the markets correct (or crash)… Simply said, it is not a matter of ‘if’ but ‘when’. And when it comes I like to be prepared for it.
When I study the tabulation of my net worth, there are 2 components that are relatively variables. Eg. My cash and SRS holdings vs my Stock holdings. The other components are more or less fixed (not changing much / less dependent on market situations).
At the moment if I am to compare these 2 components (Cash & SRS vs Stocks):
- My cash and SRS holdings: 43%
- Stocks: 57%
Actually, I would say that historically, for me personally, this cash holding is rather high. It is not easy for me to increase my cash holdings, as I do believe in staying invested for the long term. And I rarely sell my stocks. After all, we should ride our compounders.
In the near future, I do hope to keep this proportion fairly fixed (or try to increase cash proportion by a bit). Nevertheless, if there are opportunities, I will still seize them.
Anyway, back to why I am looking for a broker for US and HK stocks. As I mentioned earlier, I felt that I should be prepared when opportunities come knocking. And one way of being prepared is to have an account that is able to have zero holding fees.
As mentioned earlier, I am a buy and hold investor. A really passive one who like to ‘collect’ stocks for the long term. And the last thing I would want is a ‘holding fee’ or an ‘inactivity fee’ – no matter how small the amount is.
As I have been using local brokers to trade US and HK stocks, these stocks are held in a nominee account, and for each counter, I would be charged a holding fee of approx. $2 per month (base on current rates).
Come to think, on second thought, I shouldn’t have used the word ‘trade’ (even in the title). I seldom trade…. (Unless the market is really crashing).
That is not a big deal if I only have 1 counter eg. the total holding fees for 10 years is only S$2 x 12 x 10 = S$240. The daily value fluctuation of that 1 counter in my portfolio would probably be more than that amount.
However, what if all of a sudden I increased my US / HK stock portfolio to 10 counters, in my aim to have a diversified portfolio? The holding fees alone per month would be approx. S$20, and in a year, it would be S$240 (no matter if I have unrealised gains or losses, and no matter how small each counter is). Now, why would I want that? And by the way, I still get taxed 30% for dividends from US stocks.
I don’t think I need to pay anyone to hold my stocks for me. Do you? What ‘value add’ service is the broker providing anyway?
Anyway, no harm getting the system set up now.. and wait for the storm to come. When it starts pouring, bring out the buckets. The buckets shouldn’t have holes in them.
Asia’s First Free Stock Trading App
In my previous post, a reader, “Green cow”, suggested that I try 8 Securities.
- Commission-free stock trading by year-end? (read here)
- Asia’s First Free Stock Trading App (read here)
What initially attracted me to 8 Securities was the below 3 key points:
- Stocks in 8 securities will be held in a nominee account without any holding fees.
- No minimum trading activity fee.
- No minimum deposit requirement.
Details of the commission for trading US and HK stocks can be found below.
Funding of the account is also fairly easy eg. via Internet banking (read here).
By the way, I am not keen on their Robo-advisor ‘Chloe‘ service.
What’s the Catch?
If you study in detail their fee, you would notice that for the Hong Kong stock dividends, there is a fee of HKD 0.8 / Lot (Min HKD 28). By the way, 1 Lot is the same as 1 Counter, and HKD 28 is SGD 4.88.
In comparison, there is no such stock dividend fee if you are using Standard Chartered Online Trading.
So yes, that to me is a loophole (in the case of 8 Securities)… However, Standard Chartered (SCB) charges a fee for trading for their Personal Banking Clients (read here), while 8 Securities doesn’t:
- Minimum Fee: $10 if shares are traded in AUD, CHF, GBP, SGD & USD currencies ($10.70 with 7% GST)
In addition, I would also need to first have a banking account with them (SCB) as well. Consequently, I would then need to maintain a min. deposit amount. As mentioned earlier, I don’t particularly like having to maintain a min. deposit (directly or indirectly). There are various types of SCB banking account, however, the min. deposit amount I need to maintain is S$1000. This to me, makes SCB online trading rather unattractive. I don’t need another bank account (to park my cash), and I don’t see many SCB ATMs around nor do I need their credit cards etc.
Pertaining to 8 Securities, another point is I am not sure of is their currency conversion rates. I do understand Standard Chartered’s rates are not that favorable compared to other brokerages (guess this is how they earn).
However, nevertheless, I think looking at these two brokerages (8 Securities and Standard Chartered), their fees are pretty close. And the major point is having no holding fees for US and HK stocks.
The Tricky Part
However, to open a trading account with 8 Securities from overseas (which I am, since I am staying in Singapore and 8 Securities is located in Hong Kong) is a bit tricky (see below).
I need someone to witness me signing the documents since I can’t be at the 8 Securities office in Hong Kong. And that someone can’t be anyone.
“Qualified witnesses include a bank branch manager, lawyer, public accountant, justice of the peace or a notary public.”
When looking at the list above, I decided that a bank branch manager seems the most approachable :p (My last choice is probably the justice of peace hehehe).
So I went to the local bank (I have stated my local bank account in the 8 Securities application form) and showed the counter staff the portion that requires the witness signature.
After waiting for a while, she came back and informed me that the bank branch manager does not sign as a qualified witness. However, for S$20, the bank will provide a Letter of Reference (LOR) to be attached to my application so that the HK brokerage can contact the bank for any inquiries pertaining to my details.
I checked with 8 Securities, apparently, this is not feasible. By the way, I realized that 8 Securities response time to emails is pretty prompt. I was able to send the email (at the bank branch), have a quick lunch in between, and received the reply within half an hour (or more like 10 minutes :p).
So my next option was to get a notary public to witness me signing the documents. By the way, there are quite a number of notary public offices in Singapore. I reckon they are basically law firms (lawyers with a certain min. no. of years of practice experience).
The fee for a notary public to witness me signing the document is S$115.
Oh yeah, FYI, I have never been in a law firm before. The Notary Public office which I went to, was a small law firm. The lawyer was having a meeting with a couple, who are probably in their 40s or 50s (I guess), when I reached there. I guess the lady was having a problem with his ex-husband and they were discussing their options (pertaining to the divorce probably). Interesting discussion – I reckon it is great when you can converse in Mandarin, English, Hokkien all in one sentence….
So with that, I was able to mail my application. Oh yeah, if you are wondering, it costs me S$2.20 to mail the letter to 8 Securities in HK. And I did drop 8 Securities an email with an attachment showing that signed portion by the Notary Public lawyer before I mail it out… ‘looks good’ according to them. As usual, 8 Securities’ email reply was really prompt. I didn’t have to wait for long.
See how it goes from here.
there is fee charged on handle of dividend.. standard chartered bank is free.
Yup. Thank you. That is a good point I noticed that fee too. Think it is HKD 0.8 per lot or HKD 28 (whichever is higher).
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Thank you for sharing such informative step by step guidance through your blog post. Would you mind suggesting me the way to subscribe to your blog post?
You are welcome.
I reckon you must be using your smart phone to read my posts. The ‘Follow Me’ widget may be hidden in the mobile mode. You can click on the ‘View Full Site’ link at the bottom of each post. From the full screen you can see the ‘Follow me’ widget at the top right of the column.
I’ve been eyeing 8 securities for some time too and like you, I live “overseas”, outside of Hong Kong and am wondering how to settle the money transfer issue. It seems problematic.
Glad my post is useful.
Hi I am from Hong Kong but seems the fees about SC is wrong
They do charge min. HK$30 or 0.5% for stock dividents.
Also a holding fee of $100/6 months for accounts without transactions.
May SC SG provide better offer than SC HK?
I liaise with the Hong Kong office direct. The main issue is not the fee from SC but the fee incurred due to bank fee for transfer of money.
I liaised with the Hong Kong office direct. Dont think SC has a branch in Singapore.
The main issue is not the fee from SC but the fee incurred due to bank fee for transfer of money.