For any Malaysian investor, the benefits of buying US stocks have become more apparent in recent months. A quick check of US Wall Street’s S&P 500 index shows returns in double digits in the last 10 years compared to Malaysia’s FBM KLCI which recorded a modest growth in the low single digits for the last decade.
Some investors are even willing to jump through hoops just to access these services in other countries – all in an effort to get hold of MAANG stocks – Meta (Facebook), Amazon, Apple, Netflix and Google (Alphabet).
In the past, access to US stocks meant using a Singapore-based stock exchange and the addition of extra charges for money transfers from MYR to SGD to USD before you can actually buy US stocks. The growth of online trading platforms in Malaysia now allows retail investors to easily buy US stocks at a more reasonable rate with the same enjoyable perks.
Rakuten Trade has just launched its newest service for US equity trading on its platform, offering Malaysians the opportunity to trade securities on the New York Stock Exchange.
What are your options to buy US stocks in Malaysia?
Malaysians have several options for trading international shares online. This has provided many opportunities for retail trading, for just about anyone to build their wealth through passive investments.
These services allow for any amount to be traded, reducing the wealth barriers that once existed for investing on Wall Street. All from the comfort of your own phone.
However, which service to use is not always straightforward. Not all of them are registered with the Securities Commission (SC), yet they remain popular with investors for their access to certain markets.
Following are the digital investing platforms offering US Stock and ETF trading:
| Name | Markets covered | Commission And Platform Fees | Investments | Fractional shares |
|---|---|---|---|---|
| eToro | 17 exchanges | 0% commission for US stocks | Stocks, ETFs, commodities, currencies, indices, crypto | Yes |
| moomoo | US, HK, SG, CN | Min. US$ 1.99 per order Max. 0.5% * trade value per order | Stocks, ETFs, options, futures | No |
| Rakuten Trade | US, HK (coming soon) | Minimum US$1.67 to Maximum US$24 depending on transaction amount | Stocks, ETFs | No |
| TD Ameritrade Singapore | US | 0% commission for US stocks and ETFs | Stocks, ETFs, options, futures | No |
| Tiger Brokers | US, HK, SG, CN, AU | Min. US$ 1.99 per order Max. 0.5% * trade value per order | Stocks, ETFs, mutual funds, options, warrants, futures | No |
Many of the local banks also offer US share trading services like Alliance One Invest, CIMBiTrade, Hong Leong HLeBroking, RHBInvest and UOB Kay Hian Utrade, but may incur money transfer fees, plus higher transaction fees. Not all these platforms offer the convenience of a fully online journey.
How do you pay for your US stock purchases in Malaysia?
Funding your account depends greatly on where your preferred trading platform is located. A majority of these online trading platforms are based in Singapore, which means that you will need to convert your Malaysian Ringgit into SGD before it can be converted into USD. This translates to a higher currency conversion charge.
To do this, you will need to either perform an international bank transfer or open a Singapore bank account. If you’re an existing CIMB account holder, you can apply for a CIMB SG account completely online. Then link your CIMB SG account with the local CIMB account. Transfer from CIMB SG to Tiger Brokers is at no cost and instant. However, if you don’t have a CIMB account, you could only choose to transfer via TT or Wise.
There is an option closer to home – Rakuten Trade. Based in Malaysia, there are less proverbial hoops to jump through. You’ll still need to perform a bank transfer to fund the account, but it’ll be a more convenient (and cheaper) option. It’s like making a normal cash transfer online and is reflected in your trading account immediately.
What Rakuten Trade offers:
- trade US markets via a cash account upfront,
- completely online using web and an iSPEED.my app
- Competitive exchange rates that are better than most banks
- Low brokerage fees from USD 1.67 to USD24 (RM7-100)
- US trading ideas powered by their internal research team and Motley Fool
- RT points earned on trades to offset brokerage fees
What services are available from these digital investing platforms?
eToro and Tiger Brokers both offer a wide range of securities for investors, covering the gamut of stocks, ETFs, commodities, currencies, futures, indices, warrants, and even cryptocurrencies.
In particular, eToro offers access to 17 different exchanges and even allows fractional shares (you buy a portion of one share). However, these platforms are more suitable for experienced investors. For new investors, it could also be overwhelming due to the sheer number of options available.
It should be the default starting point for retail investors. But it isn’t. Here’s why.
Securities Commission (SC) Investor Alert List
eToro is unfortunately on the SC Investor’s Alert List. Which means that while you can trade with it, you should go into it understanding that you are shouldering additional risks.
This is because eToro is not based in Malaysia, which means that investors who use the platform cannot seek remedial action from Malaysian authorities if anything should go wrong with your investments.
In fact, both TD Ameritrade Singapore and Tiger Brokers are also on the SC’s Investor Alert list.
At the same time, while moomoo is not on the alert list, it is also extremely new to the market (established in 2018). As it is not registered in Malaysia, it is unclear if the SC will add it to the list at a future date.
Meanwhile, Rakuten Trade has recently expanded its services to allow Malaysians to trade stocks and ETFs on the New York Stock Exchange (NYSE) and NASDAQ. Retail investors now have the option of trading on both Bursa Malaysia and US markets with a single account – the Cash Upfront account.
This account works like a debit card that allows you to trade on either the local stock exchange or buy US stocks using only your available cash in the account.
List of services available on Rakuten Trade’s Cash Upfront:
- Trade both Malaysia and U.S. shares under the same account.
- Trade based on the available cash you have now.
- Trade and pay brokerage rates from as low as RM7 to a maximum of RM100.
- You will always know your actual cash/portfolio position.
- Your available cash balance will earn interest at 1.00% per annum.
- Which digital investing platform is your best pick?
Your experience and risk appetite as an investor determines what you should be doing in this case.
We cannot directly recommend any platform on the SC Investor Alert list. The lack of local regulatory oversight represents a massive risk for any investor; especially for those who may not have access to legal representation in the country of the exchange.
By default, Rakuten Trade is the only locally available online platform for trading on foreign exchanges. Based in Malaysia, it allows you easier access to your funds and it is regulated by the Securities Commission. Additionally, your trades from the Cash Upfront account are fully funded by the deposits you make into your cash upfront account while the remaining balance is placed in a Trust account held by Kenanga Investment Bank.
Currently, Rakuten Trade offers access to the US stock market which is generally what most investors want – especially for tech companies. There are plans to expand the service to the Hong Kong stock market, offer fractional share trading and USD currency wallet in the near future, with further expansions on the horizon.
Looking to start investing overseas? We recommend signing up with Rakuten Trade.
