Investing abroad

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17. Markets go global

There is now a rapidly accelerating worldwide trend towards cross-border trading in equities. The Nasdaq market in the States has already opened an exchange in Japan, Canada and Europe.

Each move brings us closer to a future of round-the-clock, round-the-world sharedealing. Although there will be many delays along the way, the eventual outcome is scarcely in doubt. The giant financial institutions that dominate trading are themselves getting bigger all the time. They are demanding simpler and cheaper access to international markets - and they will get it, thanks to their size and influence.

What will this mean for private investors? The good news is that foreign markets will be more open than ever before. Transaction costs will gradually come down to UK levels. The bad news is that trading will in all probability focus ever more heavily on large companies and bypass smaller ones. It has been suggested that institutional investors may no longer take any interest in companies capitalised at less than £500m.

If that does happen, it will be much harder for private investors to profit from overlooked growth and value prospects at the lower end of the market. Smallcap share prices will take far longer to get moving without the weight of institutional buying behind them. They may only really motor during private investors' periodic bursts of enthusiasm, as tech stocks did for six months after September 1999.

However, you can turn this to your advantage. With markets poised to go truly global, now is the time to start gathering information on the international large and midsize companies that will be the focus of the future. You can start with the many websites, especially Wright's Company Profiles and Hoovers. The following books will also help to broaden your horizons:

Finally, look for inspiration to Sir John Templeton, the pioneer and acknowledged master of professional global investment:
'If you search world-wide, you will find more bargains and better bargains than by studying only one nation. You also gain the safety of diversification.'

1. Why invest abroad? 2. Risk and reward in foreign investment 3. Custody risk 4. Currency risk 5. UK companies are foreigners too 6. Foreign unit and investment trusts 7. Picking foreign trusts 8. How to make the most of trusts 9. Tracker funds for foreign markets 10. Foreign companies on the London exchange 11. American Depository Receipts 12. Investing in American companies 13. Investing in European companies 14. Investing in Asian companies 15. Investing in other markets 16. Dividends and withholding taxes 17. Markets go global 18. Conclusion

• Mobius on Emerging Markets