I would like to buy a stock of a company, unfortunately I don't have access to the stock in my local stock exchange nor do I have access to the stock exchange of the country of the company.

But I would have access to two other markets which have the stocks.

It would look like this:

enter image description here

(Yes, I just realized that I'm bad at drawing stuff)

From the picture you can see that I can't "access" the stock directly. Now the question is:

Which Stock Exchange should I prefer?

Both cost me the same from fees, both are same level of complexity regarding taxes. In addition, the currencies are not bound with each other (no fixed exchange rate)

  • Maybe someone who's more fluent in English can rephrase the title for me... the stock IS available in the country of the company, I just don't have access to that stock market. – Swizzler Jun 12 '17 at 17:29
  • What's ATS? SGD presumably is Singapore Dollar, but the only ATS I can see was the Austrian Schilling which no longer exists (replaced with EUR). Other things being equal, I guess you want the exchange where conversion from your currency (?) to the exchange's currency (USD/EUR) to the stock's currenct (SGD) is less likely to fluctuate. – TripeHound Jun 13 '17 at 11:33
  • In efficient markets it wouldn't matter, there cannot be a difference between the prices. So the only question is how to hedge SGD and/or EUR or USD risk, right? – hroptatyr Jun 13 '17 at 12:08

Theoretically, it shouldn't matter which one you use. Your return should only depend on the stock returns in SGD and the ATS/SGD exchange rate (Austrian Schillings? is this an question from a textbook?). Whether you do the purchase "through" EUR or USD shouldn't matter as the fluctuations in either currency "cancel" when you do the two part exchange SGD/XXX then XXX/ATS.

Now, in practice, the cost of exchanging currencies might be higher in one currency or the other. Likely a tiny, tiny amount higher in EUR. There is some risk as well as you will likely have to exchange the money and then wait a day or two to buy the stock, but the risk should be broadly similar between USD and EUR.

  • I used ATS to obscure the stock I'm interessted and to make it more obvious the currencies don't have any connection. Anywway an excellent answer, thanks a lot – Swizzler Jun 13 '17 at 16:11
  • ahh... fair. Good luck with the trade. – rhaskett Jun 13 '17 at 16:16

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