Why did I spend more than $600 to transfer my stocks from one brokerage to another?
Just to share a bit before discussing my take on Ant Group’s IPO. Received quite a bit of this query and thought of replying it here. Will also answer this question together with the common question I receive “Which brokerage do you use?”
I am currently using multiple brokerages: Kim Eng / Standard Charted Brokerage (SCB) / Phillip Securities (POEMS) / Interactive Brokers (IB) / TD Ameritrade. I have holdings in so many brokerages due to legacy issues, a mistake during my younger days for not planning ahead. I just went through the trouble of transferring stocks and to consolidate in IB, POEMS & SCB moving forward. Have been procrastinating to do the transfer as it is quite costly to do so (around S$60 per counter transfer fee). The fees and hassle have been deterring me for quite some time.
Although it goes without saying that it’s not the brokerage you use but the stocks you buy that matters most, choosing the right brokerage can help to save costs and use it for some sumptuous meals or new gadgets. Afterall, it is a one-time effort to choose the right brokerage. Imagine the number of Haidilao treats I could have gotten with the custodian and stock transfer fees I paid. Advising you to have the Haidilao meals I couldn’t have.
Haidilao Misfortune: Smacked by Noodle/Solid smack [1]
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Below screenshot from IB shows a 21,444.47% gain. I wish they were profits 🤣 This is due to transferring half of my portfolio (worth S$428k) over to IB (Sorry a bit of a “click bait”). Also transferred quite some of it to POEMS. All in all, I spent a total of S$600+ to carry out the transfer. Apart from monetary pain, it was a lot of hassle to countercheck each company’s ex-dividend date and track which brokerage will be reimbursing me with the dividends. Unfortunately, 1 of my holding’s ex-dividend date happened to be on the transfer date. Now I need to liaise with both brokerages to enquire who will be receiving my dividend.
Choosing the Right Brokerage
To choose the right brokerage really depends on the individual’s purpose and usage. For example, DBS Vickers might hold an appeal to some for its synergy (free $$) with DBS Multiplier. Using myself as a case study, I use POEMS due to $0 custodian/maintenance/dividend handling fees under their privilege account, SCB due to $0 custodian fees and no minimum commission being their Priority Banking client and IB as I trade options, for its low fees and I can also loan out shares to earn some yields. Yes, I am both an investor and trader. Much more of an investor actually as I don’t actively trade. I only wait for very good set up to take a position to earn some milk powder money whereas my main holdings are vested for the long run. As I have often mentioned, there is no straight formula for investing and there is a need to be flexible at times, i.e. learning every strategy and using it at the right scenario at the right time. Hence, maximising returns.
Through POEMS, I also parked my “war chest” (idle cash) in their MMF (Money Market Fund) for approximately 1% per annum yield paid out on a daily basis (not a sponsored post, they have a FAQ on the risks involved [2]).
If you asked me which platform is the best for beginners, my guess is SCB because it has relatively cheap minimum brokerage fees and FOC (Free of Charge) custody fees. Also, SCB has been around for quite some time already and I have personally been using it for years. Some brokerage might have low trading fees but charge a quarterly maintenance payment. Hence, do check clearly on all of the possible fees and the fine prints prior to selecting your brokerage of choice. Eventually, when your portfolio grows bigger, it pays to review and optimise like I did as you will get to enjoy more perks such as fee waivers.
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More from EngineerInvest.com:
“Stock Market & COVID-19” where I cautioned (a month prior to the crash) of the possible market tumble & how to protect your portfolio published Jan 2020
“EngineerInvest.com’s go-to Charts to Determine Market Bottom” The all-time favourite article where I shared how I determined it was time to buy stocks published early April 2020
“After Jack Ma, is Alibaba an enduring 100-year growth machine?” published 6th June 2020 where I shared on how we can identify a visionary company and why Alibaba is one of my largest holdings
“10% Dividend Small Cap Stock & a Potential Multibagger” published 16 May 2020. This stock is later sold at more than 40% gain in a month since the post. The transaction was shared in “A 40% Gain Stock (Since our post last month), Recent Trades & “China’s Goldman Sachs”
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Updates from Telegram / Facebook page:
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My Take on Ant Group IPO
Thanks for participating on the poll. Similar to most pollers, I’ve also voted that I’m excited for Ant Group’s (previously “Ant Financial”) IPO. Not so much to buy the IPO but because I own Alibaba shares. CNBC reported “Ant Group will be highly accretive to current share price of Alibaba.” [3]
More on Alibaba >> “After Jack Ma, is Alibaba an enduring 100-year growth machine?”
Ant Group is China’s largest fintech company and was spun off from Alibaba. Alibaba owns 33% equity in Ant Group [3]. Ant, in its upcoming dual listing, is speculated to be worth more than some of the biggest banks from Wall Street [3].
1. Potential as a Growth Stock
Though not a direct apple to apple comparison but do take a look at US’s PayPal historical share price:
China’s PayPal rival, Alipay, is owned by Ant Group [5]. As reported in 2019, Alipay is the leading mobile payment provider in China with the largest market share [6].
A survey by Statista substantiates this trend. Alipay is the most popular mode of digital payment. On a broader level, 60% responded that they use digital financial services on a daily basis [7].
In addition, a study by Fortune Business Insights revealed that the global mobile payment market would grow at an notable CAGR of 29% from 2020 to 2027, to a size of US$8.94 Trillion [14]. COVID-19 has also sped up mobile payment adoption [15]. PayPal already reported an 86% profit jump from this shift [16]. China’s population is many times that of the US, coupled with the rising middle class, imagine the huge potential ahead for Ant Group.
However, to be taken into consideration, WeChat Pay (by Tencent [8]) has the largest number of users worldwide [9]. Tencent is another company that should be kept a close watch on. Ant on the other hand, has presence internationally through investments in India’s PayTM, South Korea’s Kakao Pay, Malaysia’s Touch ‘n Go and in many other countries [10].
Ant is not just into mobile payment, they are into various other businesses such as money market fund (one of the largest in the world), 3rd party financial products, insurance, etc. shown below [11].
Singapore's sovereign fund Temasek Holdings and GIC were both vested into Ant Group in 2018 [13].
That said, a good company will only be in my “Main Core Holdings” list when it has proven itself for at least 3-5 years after IPO. Displaying growing profits, good management, high return on equity, strong moat etc. For IPOs, usually it lacks this information to be considered under my “main core”. However, being spun off from Alibaba and being the largest fintech company in China [18], Ant Group could be a potential “main core”.
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2. Potential Price Movements
Typically, most IPOs (not all) are usually sold on a “hyped” price.
Recall Alibaba’s IPO back in New York Stock Exchange (NYSE) in the year 2014. BABA’s IPO was priced at US$68 per share. While BABA’s stock surged as much as 38% to close at US$93.89 on its first trading day [19] and went on to spike at around US$115, BABA later tanked all the way below its offering price and to < US$60 per share. However, being a strong growing company, the share price recovered and eventually rose beyond to a new high of above US$250 per share.
Next, let’s take a look at Meituan Dianping. After IPO, the share price continually fell until it reached its low around early 2019. The rest is history. Facebook’s share price also showed similar trends.
What I am trying to bring your attention to is that not all IPOs, including “good” companies will spike in debut (although the chances are high).
Another point to note is that as long as the company you buy is a strong company, even if you buy it “expensive” now, you will still win in the long run.
Will I buy Ant Group IPO?
As I do not wish to miss out on this potential “main core”, I will be executing a small buy position when it IPO. A small position due to reasons mentioned above and especially since I’ve already owned quite some Alibaba shares as shown in previous articles. If it spikes furiously, I might even consider selling it for a “short term punt”. Can’t confirm for now as I might also be holding onto it. All depends on the market conditions during that period.
As mentioned, I usually avoid chasing rally spikes. Read this somewhere that could somewhat relate to the stock market 🤣 "The best way to catch a mosquito is not to chase it around your house, but to let it come to you."
I would prefer to buy more only if the market tanks and when everyone else is not buying such as when US-China tensions heat up. It’s really not my style to chase bulls.
This small position is more like a FOMO (Fear of Missing Out) punt so that I don’t miss out the ride.
Of course, nothing is firm yet. The IPO is still under planning phase, no prospectus is out yet. These analysis are in anticipation only.
Not just Ant, the following are planning for listing as well:
Ping An’s Lufax. One key difference is that Lufax is planning to IPO in the US [22]. This is despite US passing a bill to delist Chinese companies that do not meet their criteria [23].
Didi Chuxing (Both Alibaba & Tencent owns a stake [24]) [25]
Tencent-backed Waterdrop Inc. [26]
Tencent-Backed Beike [27]
Glad that my 3 largest holdings are Alibaba, Ping An and Tencent, of which all are having a great run. If you’ve followed my blog, you will see my buy price attached in some of my articles when I bought them in the Sep 2015, Jan 2016 period when mainstream news was very much negative on the Chinese market.
Will I add on these 3 companies? Not now when most are spamming buy calls. It’s easier/safer to recommend rising stocks. I usually choose to share on unloved stocks (enjoying gains as their valuations rise) that I’ve personally bought. Having skin in the game. That said, after my buy, the stock may continue to tank further. I remembered back in 2015, I bought Ping An at HK$38.3. However, it continued to drop further by another 20% to around HK$30!! Can’t catch the exact bottom but I’m glad that I’ve participated in the game with Ping An shares now trading above HK$80+. It took years to see the fruits. Ping An is still not as expensive though, in my opinion. Of course, there are also lucky times such as when I’ve caught Tencent at its low of HK$133.
My Portfolio Timeline >> https://www.engineerinvest.com/my-portfolio
Will share more if happen to spot any future “potential Tencent” from my daily scans.
Cheers & Great Weekend!!
Disclaimer: Just sharing from experience as I have put my own money into the stock market over the period of 17 years. I am not a Chartered Financial Analyst (CFA) Charterholder and do not have any finance-related qualifications. Please also check out our full disclaimer.
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Reference Links:
1.https://mothership.sg/2020/01/hai-di-lao-noodle-dance-smack/
2.https://www.poems.com.sg/products/excess-funds-management/
3.https://www.cnbc.com/2020/07/21/alibaba-ant-group-ipo-hong-kong-shanghai-explained.html
4.Google Finance
5.https://www.vanityfair.com/news/2016/04/ant-financial-jack-ma-paypal-rival-closed-largest-ever-private-tech-funding-round
6.http://www.chinabankingnews.com/2020/01/21/chinas-mobile-payments-market-grows-over-15-alipays-market-share-exceed-half/
7.https://www.statista.com/chart/17409/most-popular-digital-payment-services-in-china/
8.https://www.nfcw.com/technology/wechat-pay/
9.https://www.statista.com/statistics/744944/mobile-payment-platforms-users/
10.https://www.nationthailand.com/aec/30321764
11.https://s3.amazonaws.com/cbi-research-portal-uploads/2018/09/28163601/alipayservices.jpg
12.https://innovator.news/how-china-is-changing-the-financial-services-industry-2225b640c193
13.https://www.straitstimes.com/business/invest/gic-temasek-participate-in-ant-financials-us14b-series-c-funding-round
14.https://www.globenewswire.com/news-release/2020/07/16/2063089/0/en/Mobile-Payment-Market-to-Hit-USD-8-94-Trillion-till-2027-Increasing-Adoption-of-Technology-Such-as-AI-to-Stimulate-Growth-Fortune-Business-Insights.html
15.https://www.retailcustomerexperience.com/news/covid-19-is-driving-online-mobile-payment-adoption/
16.https://www.channelnewsasia.com/news/business/paypal-beats-estimates-with-86-profit-jump-on-pandemic-spending-12974834
17.http://www.researchinchina.com/Htmls/Report/2019/11601.html
18.https://asia.nikkei.com/Business/Finance/Ant-s-IPO-plan-What-to-know-about-China-s-200bn-fintech-king
19.https://www.cnbc.com/2014/09/22/alibaba-the-biggest-ever-ipo-after-more-shares-sold.html
20.https://finance.yahoo.com/quote/BABA/chart?p=BABA
21.https://finance.yahoo.com/quote/3690.HK/chart?p=3690.HK
22.https://www.reuters.com/article/us-lufax-ipo/chinas-lufax-seeks-u-s-ipo-as-early-as-this-year-sources-idUSKCN24N0SF
23.https://www.bloomberg.com/news/articles/2020-05-20/senate-passes-bill-to-delist-chinese-companies-from-exchanges
24.https://www.chinatravelnews.com/article/130550
25.https://www.caixinglobal.com/2020-07-21/exclusive-didi-rides-toward-hong-kong-ipo-source-says-101582712.html
26.http://www.aastocks.com/en/stocks/news/aafn-con/NOW.1030037/latest-news
27.http://www.aastocks.com/en/stocks/news/aafn-con/NOW.1030284/latest-news