It's no more difficult (and needn't be more expensive) to invest in shares on non-UK stockmarkets than it is to buy shares on the LSE. So why do most British investors restrict themselves to British stocks?
It does, on the other hand, make sense to restrict oneself to a small number of markets, and I try to use markets which are well-regulated. Being scammed by dishonest management is a risk for any investor in the stock market; it's easy, and legal, for top management to pay themselves huge salaries while their company slides into bankruptcy.
So, which are the best-regulated markets in the world? And what are the other pros and cons? My opinions:
1. The USA. Financial fraudsters in the US do occasionally get sentenced to prison. That never happens in Britain. US markets are by no means 100% clean but I believe they are the cleanest in the world. However, dividends from US corporations are liable to US income tax (15% flat rate if you are a UK resident).
2. Switzerland. It may sound quaint nowadays, but there is still a tradition of honesty in Switzerland. However, there is a withholding tax on dividends. Assuming you pay tax on the dividends in your home country, you can file a form to claim back the withholding tax, but there's typically a delay of a year between having the tax withheld and getting it back and filing the form is a nuisance.
3. Singapore. Law-abiding Singapore is a good place for your investments, and non-residents don't pay any Singapore tax, you only pay tax in your home country. The disadvantage of Singapore financial markets is that they're small. The daily volume in many stocks on SGX is less than £1m. If you try to build a multi-million-pound portfolio and spread it over a dozen Singapore stocks, you'll find that you can't just buy £0.5m of many stocks in a single trade without moving the market a crazy amount against you. On the other hand, if your total portfolio will be less than £500k, then I think investing on SGX makes a lot of sense.
There are too many stockmarkets in the world for anyone to know them all. What have I missed?
