If you’ve always wanted to invest in American stocks and shares, such as Facebook, Google or Apple, then you’re in luck because online stockbroker EasyEquities will soon be offering South Africans the ability to do this via its platform. The service should be available 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 4 July, 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’. Charles Savage, CEO of EasyEquities, says that initially investors will be able to access the S&P 100, Nasdaq 100, Dow 30, and top 50 exchange-traded funds (ETFs). “There are 7 000 stocks in the US but we don’t want to confuse investors by introducing too many. However, all the big brands and disruptive companies like Facebook, Google, Apple, Nike and Adidas will be available,” explains Savage.
The Easy Equity #playintheusa game, which goes live on 4 July, invites players to invest, learn and test drive their upcoming US stocks and exchange-traded funds (ETF) platform. Players will be given $10 000 “game money” in their EasyEquities US$ demo account to invest in US stocks, using the EasyEquities blog, research and community to help with their investment picks.
There are also prizes to be won, including iphones, shares and even a trip to the US. Anyone can sign up to #playintheusa by visiting playintheusa.easyequities.co.za, where full game rules, prize details and qualifying criteria can be found. Follow EasyEquities on Twitter and Facebook for daily & weekly giveaways.
For a guide on how to play, view the YouTube video.
He adds: “Being able to access those brands and those companies’ fortunes will be a great opportunity 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 present in our daily lives so it will be nice to share in their success.”
You may have US exposure already
However Floris Slabbert, national distribution manager at Ecsponent, 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 the 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 effectively 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 America. So while holding Facebook and Google 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 which banned people from some countries from entering the USA,” Slabbert points out.
As a result of Trump’s actions, theCEOs of Apple and Google had to distance themselves. Even investment guru and CEO of Berkshire Hathaway, Warren Buffett, refuted Trump’s immigration policy in his annual letter to investors.
“If Trump goes go 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 fractional shares. “The average South African can’t buy an Amazon share at $900 (around R11 500) but at $10 (R13) they can,” says Savage.
Overall, Slabbert believes US stocks 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 with Trump at the helm.