Powered by the proliferation of retail trading apps and easy-to-access investing guides for beginner or amateur individual investors, the retail investing segment has been growing rapidly.
Retail investing is going through a period of global acceleration, driven in part by the rise of online brokerage platforms.
Retail investors traded about 20% of U.S. equities in 2020. This share was bumped up to 22% after Q1 this year. Another survey discovered that about a quarter of the current retail investor pool in the U.S., nicknamed “Generation Investor,” started their investments in 2020.
In Vietnam, retail investors accounted for about 90% of turnover, with the VN Index surging 20% in 2021. Further, equity indexes in South Korea and Taiwan have seen gains of over 10%. Retail investors in South Korea accounted for about 75% of transactions, and those in Taiwan were responsible for 70% of the turnover. Singapore also witnessed a retail investing boom similar to one in 1993, during Singtel’s IPO.
At the same time, the U.S. capital market remains a lucrative investment destination, providing valuable opportunities for retail investors.
While Robinhood remains one of the most popular (and controversial) trading apps for the U.S. market, it remains inaccessible to those located outside the country. For Asia-based retail investors looking to park some of their monies in the U.S. market, here are five alternatives*.
Headquartered in New York, Webull is a 2017-founded company owned by Chinese stakeholders. The company was founded by former Alibaba and Xiaomi employee Wang Anquan. It is owned by Chinese holding company Fumi Technology, which is backed by Chinese investors, including Xiaomi. Furthermore, Wang owns 35% of Fumi Technology.
To invest in U.S. stocks or crypto, among other options, investors will need an Individual Taxpayer Identification Number, or ITIN. The ITIN is a tax-processing number for those who don’t have a social security number (SSN) in the U.S. It is applicable for non-resident foreign nationals that invest in a U.S. business and receive taxable income from it, even if they live outside the country.
Groww is an India-based online trading app that offers retail trading options for U.S. stocks. It acquired unicorn status earlier this year in April. The platform offers a free international account with no brokerage on buy/sell orders. The platform also support fractionalized trading for U.S. stocks. Users will be required to pay forex conversion charges, service charges, and outward remittance taxes for funding their U.S. dollar balance on Groww.
Brokerage accounts are managed by Viewtrade Securities (VTS), a securities broker-dealer registered with the Securities Exchange Commission (SEC). VTW works with Apex Clearing corporation to address clearing and custodian requirements of user accounts.
Investors that are not U.S. citizens or residents, who do not have an SSN or ITIN, can sign up for an international account on Firstrade. Founded by John Liu, platform allows individuals from the following Asian regions to register on the platform: China, Hong Kong, India, Japan, South Korea, Macau, Malaysia, Singapore, and Taiwan.
Investors can gain access to U.S. stocks, options, Exchange Traded Funds (ETFs), mutual funds, bonds, and certificates of deposit. Accounts can be funded by wire transfers for those who do not have a U.S.-based bank account.
TradeStation is a formerly Nasdaq-listed company that was acquired by Tokyo-based financial services company Monex Group in 2011. Investors can access U.S. stocks, ETFs, futures and options via TradeStation using the ITIN.
International residents will need to file paper applications, i.e., download the forms online, and print, sign, and mail it. Further, they will need to furnish a valid passport and address verification dated in the previous 60 days, in addition to other documentation.
Investors from Bhutan, China, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, Mongolia, the Philippines, Singapore, and Taiwan can access the platform.
StashAway is a Singapore-headquartered wealth management platform. Investing in StashAway is slightly different from the mainstream online retail investing model followed by the likes of Webull, Groww, Firstrade, and TradeStation.
The platform offers globally diversified portfolios which the company claims is accessible to 174 nationalities across 145 countries. Investors can put their money into curated investment plans based on their financial goals and risk appetite. The plans are composed of diversified, liquid, and low-cost ETFs. The company’s other products include cash management and term insurance.
On the outset, trading apps and investment platforms are proliferating across Asia. For small-time retail home investors, this makes financial markets more accessible while providing a wealth solution for the long term. At the same time, investors should keep in mind that investing involves varying degrees of risk, and not quite the golden goose that new investors may expect it to be.
*Content is intended for informational purposes only, and should not be considered as financial investment advice.
Header image by Maxim Hopman on Unsplash