markets & strategies
Australia is the lowest cost market in Asia in which to trade securities, according to a new research report conducted by global investment bank Nomura.
The group's research found Australia beat Taiwan and Korea as the market with the lowest securities trading costs in Asia, with Indonesia and the Philippines being the most expensive.
Across a market level, the cost of trading into or out of Australia in the second quarter of 2003 was 0.5%, compared with 1.04% in Hong Kong and 3.69% in Indonesia.
When examining transaction costs in the region, the Nomura study focused on what it calls 'market impact,' or the influence a fund manager's own decision to buy or sell a stock has on its price.
Joey Chan, analyst at Nomura, said: 'Transaction cost is a key component in the fund manager's decision-making process, whether it is for the purposes of portfolio optimisation or stock selection. This is true in Asia where the low and often highly-variable liquidity of many stocks magnifies the impact of such costs.'
The survey found under this measure, 29 of the least costly trades possible in the region involve Australian stocks, starting with National Australia Bank, Rio Tinto and ANZ, with an 'expected total cost of trading' of 0.35%, 0.38% and 0.38% respectively.
Chan added: 'The information should help managers to optimise their trading strategies. Armed with a better idea of the true cost or benefit, investors can adjust their trading strategy to fit with their investment call.'
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