How to Enjoy Your Share of Continental Trading
HILE Britons will happily spend billions of pounds of their income on holidays to France, Italy and Spain, the idea of buying stocks in those countries remains little more than that - an idea.
But if the signs point to a significant outperformance of continental stocks versus those of the domestic market, or those of the United States, Japan or South-east Asia, why limit your horizons?
Certainly, there can be little argument that the reticence is caused by lack of knowledge of these companies. We know as much about Nestle, Fiat, Nokia and many others as we do about UK household names and there is ample free research of these big companies available to fill in the gaps.
The main reason for the unwillingness has been the difficulty of actually trading on the various European bourses. Historically, it has been difficult and costly to trade anything other than UK stocks - largely, that is, until now.
Retail customers can already trade European stocks online, or even over the phone, for roughly the same cost as they can trade those listed in London. A number of brokers have the capability, but none of the offerings has yet grabbed the full attention of the estimated 1m active equity investors in the UK.
"The silver bullet of pan-European trading has not really manifested itself yet," says Matt Stamski, director of research at Gomez Inc, the internet evaluation company. Almost all the entrants offering cross-border trading are those that have experience of trading in Europe already, by distributing their service in domestic markets. But UK providers have been slow to push into Europe, either offering UK clients European stocks or European clients UK stocks.
"Each market is unique and as well as regulatory differences there are cultural hurdles and those are hard to get over," says Stamski, and some UK services have their own problems to get over. "A lot of UK brokers have a fair amount to do on fixing up their things here," he adds.
Among those with European offerings, Fastrade.co.uk allows dealing on all the major exchanges, InvestIn offers trading through most European bourses, while e-cortal, Comdirect and SelfTrade, the giants of European trading and all owned by German or French banks, have offered extensive numbers of continental shares for some weeks.
The latest offering is the UK launch of IMIWeb, from one of the biggest Italian banks; its domestic service has 40,000 users.
IMIWeb's UK offering even takes the pain out of translating currencies. You can run a portfolio selected from five major markets - London, New York (Nasdaq or NYSE), Frankfurt, Paris and Milan, and run them all in sterling.
The flat fee for each trade is [pound]15 until the end of June, at which point the company will "amend offers to reflect customer feedback". Presumably, suggestions that the service should be available free will not be taken up.
Comdirect has more than 500,000 users in Europe, but UK managing director John Glendinning concedes that the numbers are a small fraction of that in the UK. …