1. What are international markets?
At the heart of international investing lies the idea of diversification. International share markets are those located in a foreign jurisdiction subject to another country’s regulations. They’re a great way for investors to increase the diversity of their portfolios, adding different elements that might not be as available, or as developed, in Australia’s share market. They represent a sizeable opportunity compared to the domestic market.
In summary
- International share markets open up the opportunity to invest in the biggest economies and companies
- Buying international shares can be a great way to boost diversification
The total value of the Australian share market is about AU$2.4 trillion (as of May 2023). That’s smaller than the size of America’s largest listed company, Apple.
In comparison, the value of the New York Stock Exchange and NASDAQ come in at a combined US$44.1 trillion (as of Jan 2023). The Hong Kong, Tokyo and Shanghai exchanges on the other hand are valued at between US$4-7 trillion (as of Jan 2023).
The size of some overseas companies can also dwarf stocks listed on the Australian Securities Exchange (ASX). The largest company on the Australian share market is BHP Group at AU$225.17 billion (as of 28 June 2023) while Apple has a market cap of US$2.9 trillion (as of 28 June 2023). So, there are a lot more companies to choose from offshore, depending on your investment strategy and risk appetite.
Developed Markets
These are well established share markets, linked to the world’s leading rules-based economies with a large number of high-quality blue-chip companies available to buy and sell. They experience a large daily trade volume, are highly regulated, sophisticated and transparent.
U.S. markets are the most highly traded and their exchanges host some of the world’s most well-known companies, like Meta, Ford Motor Company, or Boeing. The major exchanges include the New York Securities Exchange and the tech-focused NASDAQ. Japan’s Tokyo Stock Exchange also hosts some recognisable names, like Asahi Group, Bridgestone and the Honda Motor Co.
Emerging Markets
Unlike the developed markets, these markets are less established, and typically don’t feature as many recognisable companies. Their trading systems are less sophisticated, and their regulations may not be as refined as their developed peers. They're typically connected to countries with industrialising economies, such as Indonesia, Thailand or Turkey.1
Disclaimer
1CommSec does not provide access to these markets.
CommSec Learn is intended to provide general information of an educational nature only. Investing in overseas markets exposes you to risks including those related to movements in foreign currency exchange rates and market prices. The information has been prepared without taking into account your objectives, financial situation or needs. For this reason, any individual should, before acting on this information, consider the appropriateness of the information, having regards to their objectives, financial situation or needs, and, if necessary, seek appropriate professional advice. You can view the product Terms and Conditions, Product Disclosure Statement, Best Execution Statement, Financial Services Guide and should consider them before making any decision about these products and services. Any securities or prices used in the examples given are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance. Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945. CommSec is a Market Participant of ASX Limited and Cboe Australia Pty Limited, a Clearing Participant of ASX Clear Pty Limited and a Settlement Participant of ASX Settlement Pty Limited.