For investors in Singapore, the local Singapore Exchange (SGX) doesn’t just offer access to companies that do business in the country.
In fact, in recent years, the SGX has been building more access for investors who want to tap into broader Asian growth. The exchange has done this by issuing Singapore Depository Receipts (SDRs) of Hong Kong-listed and Thai-listed companies.
This gives investors in Singapore the ability to trade, settle, and receive dividends in Singapore Dollars (SGD) but for underlying securities listed in Hong Kong or Thailand. Investors can also buy and sell SDRs with the local brokers they’re already using in the same way they invest in Singapore-listed stocks, and choose to keep their SDRs in the Central Depositary (CDP).
These SDRs, with the Thai ones first to launch since May 2023 before Hong Kong SDRs debuted in October 2024, give investors the ability to get exposure to both Thai and Chinese companies but with local trading hours and in local Singapore currency.
One of the main attractions, particularly for those interested in Hong Kong stocks, is the lower minimum trading lots on the SGX. So, here’s how investors can use SDRs to build a diversified portfolio with less than $1,000.
Read Also: Investing In Thai SDRs: 8 Thai Blue-Chip Stocks That Singapore Investors Can Trade Through The SGX
Diversify Your Portfolio By Geography And Sector
With access to 10 Thai SDRs and 11 Hong Kong SDRs, Singapore investors can pick and choose how they want to build their portfolio – not just to Singapore companies, but also to various Thai and Chinese companies.
Remember, while many of the SDR companies are serving their local markets, they would also have in overseas revenue exposure, too. In addition, many are in traditional sectors like banking and energy, while others will have more “growthy” exposure in cutting-edge sectors like technology, semiconductors or electric vehicles (EVs).
Tap On The Chinese Growth Story
For anyone interested in EVs, you shouldn’t ignore the EV behemoth that is BYD Company (SGX: HYDD). The firm is the world’s largest producer of EV and hybrid cars, having overtaken Tesla in the fourth quarter of 2023, in terms of total EV sales.
It also happens to be one of the world’s largest battery manufacturers too. Fortunately for Singapore investors, we can get a piece of this company via the Hong Kong SDR for as a little as $2 a share – meaning one board lot of 100 shares costs around $200.
Next up, investors might want traditional tech exposure to one of China’s consumer tech giants. In this case, it probably makes sense to invest in Alibaba Group Holding (SGX: HBBD).
One of the “tech OGs” of China, Alibaba’s dominance in the online consumer space, as well as its burgeoning Artificial Intelligence (AI) business, means it can fit nicely into any investor’s growth portfolio.
With its SGX-listed shares costing around $3.60, one board lot of Alibaba’s SDRs (100 shares) will only cost around $360.
For those who want some yield in their Chinese investment exposure, then one of the country’s big banks works well. In this sense, it would be appropriate to buy Bank of China (SGX: HBND) – known as one of the country’s “Big Four” state-owned banks.
With the company’s shares yielding around 5.7%, and the SGX SDRs costing only $0.75 per share, investors could buy two lots of Bank of China SDRs for $150.
Read Also: Understanding China A-Shares: Top ETFs to Watch
Gain Southeast Asian Exposure
For those who want some exposure to the Thai economy as well, then focusing more on its inherent strengths might be a good idea. Thailand is well known for its tourism industry and the strength of its hospitality offering.
That’s why a company like Airports of Thailand (SGX: TATD) could be a good option for those who want investment exposure to the Thai tourism story. Also known as “AOT”, the firm manages international airports in Thailand.
It makes the bulk of its revenue from aeronautical revenue (like aircraft landing and parking fees) as well as non-aeronautical revenue (such as retail and advertising revenue at its airports). One board lot of AOT’s SDRs on the SGX will cost around $120 – based on its latest share price of $1.20. AOT also offers a dividend yield of around 2.6%.
For investors who might want a bit more predictable income, then a telco fits the bill. And, coincidentally, one of Thailand’s biggest telcos is available through a Thai SDR; AIS (SGX: TADD), which is short for Advanced Info Service.
With its 46 million mobile subscribers in the country, AIS offers investors an attractive annual dividend yield of around 4.3%. One lot of its shares also costs only $107 based on its latest share price of $1.07.
Read Also: Guide To Singapore Depository Receipts (SDRs): How To Start Investing In Thai Stocks Through SGX
Diversify And Adjust Your Portfolio Using SGX-Listed SDRs
Overall, investors can buy the five SGX-listed SDRs we discussed above for under $950.
Of course, the examples we gave are just a taster of what investors could build a portfolio around. Depending on their risk appetite and desire for either growth or income, the amount of shares allocated to each could be adjusted. That’s the beauty of this approach.
When looking at Singapore’s stock market, we should remember that we can also get exposure to other exciting Asian economies right here at home in Singapore Dollars.
