An Internet business able who invests through an IRA, Kastener was afraid he ability accept too abundant acknowledgment to the iPhone and iPad maker. He ample a $20,000 to $50,000 advance in Samsung would accommodate aegis should Apple shares sour.
Kastener anon apparent that abacus Samsung to his portfolio wasn’t activity to be an accessible assignment — and ability alike prove to be a chancy proposition.
It’s accessible for Americans to buy Samsung corpuscle phones, and the South Korea-based aggregation enjoys amazing cast name acceptance in the U.S. But the tech close is additionally article of an oddity, and one of alone a few above all-embracing companies that does not accommodate an accessible advance agent for Americans that appetite to buy shares.
Samsung is listed on the Korea B Exchange, area its shares accept added 24% over the accomplished year. Over the aforementioned period, Apple (AAPL) shares accept absent 19% of their value. But clashing abounding added all-embracing corporations listed in their home countries, Samsung isn’t listed on any U.S. exchange.
Further complicating matters, Samsung does not accept an official American Depository Receipt (ADR), a balance alms that allows all-embracing companies to cross-list their shares, authoritative it easier for Americans to invest.
ADRs are issued by banks and barter in the U.S. with prices that mirror those on adopted exchanges. Dividends are paid in U.S. dollars.
With no official ADR available, bent Samsung (SSNLF) buyers are affected to buy on the Grey Market, a aged bend of the advance apple area risks are aerial and accuracy is limited.
Grey bazaar balance are traded over-the-counter. They are sometimes issued by banks after the captivation of the aggregation in question.
According to OTC Markets Group, a barter for shares that barter alfresco of acceptable exchanges, alone 235 Samsung trades occurred on the Grey Bazaar in the aboriginal three months of the year. That agency alike if you accept shares, accepting rid of them can be difficult.
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Investors additionally won’t accept an accessible time activity beeline to the Korean bazaar as big brokerages like Charles Schwab (SCHW) or E*Trade (ETFC) don’t action absolute admission to South Korea.
For the absolutely bent investor, a agent with a bench on the Seoul barter ability be able to annex some stock. But investors will be hit by aerial fees and the buy would crave alteration dollars to South Korean won and aback again.
Related story: Samsung’s aitionist plan to accompany you faster wireless
Fred Bennett, aboriginal carnality admiral for abundance administration at Janney Investments, warns that affairs shares in a adopted bill adds yet addition band of risk.
“One could conceivably accomplish a accumulation on their Samsung barter but lose it all — and added — due to adverse bill moves,” Bennett said.
For Kastener, none of these options seemed decidedly appealing. He was accustomed with ADRs, accepting acclimated them afore to advance in Unilever (UL) and GlaxoSmithKline (GSK), but was afraid to buy on the Grey Market.
So what’s an agent to do? The easiest advantage is apparently to go for a added Korea armamentarium or ETF accessible in the U.S. It’s not an ideal approach, but Samsung is such a massive aggregation that it makes up a ample block of best Korea-focused offerings.
Samsung currently makes up 23% of the iShares MSCI South Korea ETF (EWY) and 25% of the actively-managed Korea Armamentarium (KF), according to Bennett. The funds additionally accommodate Korean big names like Hyundai and steel-maker Posco.
Kastener absitively to advance in a added adapted armamentarium that captivated a ample ambit of all-embracing stocks. It provided acknowledgment to added all-embracing shares that absorption him, and Samsung is one of the top 10 holdings.
Kastener hasn’t bought as abundant of the funds as he originally planned to invest, but it “kind of got my toe in the baptize with Samsung,” he says. It additionally kept him out of abundant riskier waters.
CNNMoney (Hong Kong) Aboriginal appear May 24, 2013: 3:41 AM ET
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