How to Trade Stocks Outside of Croatia?

To trade stocks or not to trade? Is it too risky or worth it? These are roughly the first questions a potential stock investor asks themselves.

Of course, assuming they have done some research on what stocks are, how to invest, and that they are aware of the risks. Once they have answered all these questions and mentally prepared themselves for this bold move, they open the list of stocks on the Zagreb Stock Exchange and are very likely disappointed with the offerings.

Although more than 300 companies are listed on the domestic exchange, the average daily turnover is around 17 million kuna, with the average regular daily turnover of stocks in February being 6.5 million kuna. This means that the market liquidity is low, which means it is not easy to buy and sell stocks. In other words, it may happen that the price of a certain stock is too high compared to what someone is willing to pay, and the seller does not lower the price. Or when someone already has stocks, especially if they have a larger number in their portfolio, it is very difficult to “exit” that investment without drastically crashing the price.

Therefore, some investors, namely those eager to invest in more liquid securities and markets, may wish to try their luck outside the borders of Croatia. Whether it is New York, Frankfurt, London, Tokyo, or Budapest. That is why we contacted brokers who explained to us how to trade abroad, as such a move is much more expensive than trading in Croatia.

– Trading abroad is essentially no different from trading on the Zagreb Stock Exchange, at least not from the client’s perspective. The contractual documentation, specifically in our case, between the company and the client is standardized, allowing the client access to all exchanges we cover (all relevant EU markets, the region, US markets). For trading structured securities, an assessment of suitability is also conducted, and clients are informed about some specific risks regarding trading abroad and holding assets in collective custody accounts. For the majority of markets, clients have direct access through online trading – covered are the US markets, members of the Euronext system /Paris, Lisbon, Brussels, Amsterdam/, the German market through the XETRA system, and the exchanges in Vienna, Stockholm, Helsinki, Milan, Dublin, Ljubljana, Bucharest. For other markets, it is possible to place orders by phone or in another manner in accordance with our general conditions – they explain to us from Fima Securities.

They say that the principle of operation is no different from trading on the Zagreb Stock Exchange. Before purchasing stocks, a money deposit is required.

– Investment companies are authorized to receive foreign currency remittances from clients, and in this context, deposits in EUR and USD are also possible. FIMA Securities also performs currency conversions as needed – which means that the broker covers the entire spectrum of services for the client, who will have everything done on their behalf and at their request. After the deposit is made, the client places an order to purchase the instrument through the online system (most often) or by some other means. Through the online system, it is possible to place orders, track transactions, print statements and orders in PDF format, search orders, and view prices with a delay of 15-20 minutes – they say from that brokerage house.

Of course, trading abroad has its costs.

– The costs (commissions) are publicly available on our price list and depend on the market. A specificity is the transaction fees for custody costs, considering that the purchased instruments are held in clients’ collective custody accounts that are separate from the company’s own assets, in accordance with legal regulations. However, given the lower initial brokerage commissions, the costs do not significantly differ from trading Croatian stocks – they note from Fima Securities.

Foreign developed markets are becoming increasingly interesting to Croatian investors, not only professional investors but also small investors, especially due to the breadth of investment choices, liquidity, and the availability that does not differ much from the availability of the home market, namely the Zagreb Stock Exchange.