RE: Curiosity has got the better of me!8 Apr 2020 12:14
No problems Zippy, life is all about learning.
I invested in Commonwealth Bank of Australia , my favourite bank, who gave me a few hundred free shares when they took over my Insurance Company (operating worldwide, but in the UK, Colonial Mutual). Those shares are held in my name somewhere and that organisation charges to a fortune to deal so Ijust leave them in situ.
Happily, CBA convert dividends from AUD to GBP and transferr my dividends direct to my UK bank in ££ , which I am perfectly happy with.
I decided to buy some CBA through my broker who operated internationally and by default you have a cash account the currencies they deal in. Most will be zero of course.
IG give you the option (changeable at any time , as often as you want) to deal totally in local currency, for us, GBP.
If you take this option you fund your account and whenever you trade abroad they will convert enough of your GBP balance to conduct the transaction. If you sell overses , they will convert the money back to £!
You lose out each way because they have different buy/sell rates for currency - the same as shares prices - spreads!
Alternatively , you can opt to have multi-currency balances, which is what I have.
I bought CBA shares and receive dividends at my broker account. So my AUD blance increased by exactly those dollars 100% dividend!
CBA were best part of £50 per share so reinvesting the dividend in CBA shares did not interest me (an option I should have taken perhaps, but they are down to £30 currently).
My preferred action was to use those dividend dollars to by TOU (TLOU) shares with those dollars in my AUD cash account. So twice a year I get a dividend which is 100% (less $10 commission) used to buy TLOU shares.
In practice that was the case until I sold CBA at $93 (having bought in the $70 range) and used the money to buy HL. back in Blighty for their dividend! Was going to go back to CBA after the dividend but HL collapsed from £18 to £12 so I am sticking with them for their dividend instead.
So I have ASX shares in TLOU for no good reason just as you thought!
BUT the foreign exchange rate between AUD and GBP varies all the time , so as MM said, arbitrage comes into it! If the dollar became extremely strong against the £ I can sell my ASX holding and settle in £ for a small windfall. And vice versa, of course!
I hope that gives you some incite into foreign exchanges from our point of view!
From the companies point of view , they simply prefer to have shareholders money from three countries rather than one? And the added work makes it worthwhile!
E.G. Which exchange did the pension fund use to buy their shares? Unlikely to be the FTSE, and if it was BSE (I don't know without researching) would they have bothered on the the other two?
And TG's professional friend, bought through ASX .... would they have ventured overseas?
I think TLOU kno hat they are doing .... so relax!
Sign In
Follow the stocks
