The World at Your Fingertips: A Primer on International Markets

There’s no place like home is a perfectly acceptable sentiment when you’re thinking about where you want to spend time, but it may not always be the most effective strategy for your portfolio.

Overexposure to a single market – even Canada, which did relatively well in 2024 – carries risks, because if something happens in that market, it could potentially impact all of your finances. Investing in foreign markets may help to counteract this risk by increasing the diversification of your portfolio, which in turn reduces the influence of country-specific risks, whether economic or political.

To help investors grow and diversify their portfolios, RBC recently launched international trading, allowing direct investing clients to trade stocks on exchanges in a number of countries. But before you start trading, it may be a good idea to familiarize yourself with these new opportunities and the risks that come with investing farther afield.

Here’s a quick overview* of the markets RBC Direct Investing has opened up to clients and some of the risks and opportunities they present.

Hong Kong
Name of exchange: Hong Kong Stock Exchange (HKEX)
Currency: Hong Kong Dollar
GDP: US$401.75 billion (2024)
GDP growth since 2014: 38%
Top imports: Integrated circuits, broadcasting equipment, machine parts, gold, jewelry
Top exports: Gold, integrated circuits, gas turbines, broadcasting equipment, machine parts

Hong Kong’s low taxes and robust regulatory framework create a favorable environment for businesses, while its currency, pegged to the U.S. dollar, is relatively stable. The region’s well-established financial ecosystem, commitment to research and development, and emphasis on sustainable finance may be enticing for investors. However, despite Hong Kong’s strengths, its relationship with the government of China contributes to a degree of economic uncertainty that investors may want to consider.

UK
Name of exchange: London Stock Exchange (LSE)
Currency: Pound sterling
GDP: US$3.59 trillion (2024)
GDP growth since 2014: 16.18%
Top imports: Natural gas, cars, crude petroleum, gold, garments
Top exports: Gold, cars, gas turbines, crude petroleum, packaged medicine

The uncertainty of life in the post-Brexit era has weighed on the UK and contributed to sluggish economic growth relative to global peers. High levels of public debt have required fiscal conservatism and immigration restrictions have led to a shortage of skilled workers in key sectors. Still, London’s enduring financial leadership and strong tech sector may make it an interesting option for investors. New infrastructure projects, such as the high-speed railway currently in development, may also be seen as investment opportunities.

France
Name of exchange: Euronext Paris (EPA)
Currency: Euro
GDP: US$3.17 trillion (2024)
GDP growth since 2014: 10.84%
Top imports: Natural gas, cars, refined petroleum, crude petroleum, garments
Top exports: Aircraft, packaged medicine, cars, natural gas, vehicle parts/accessories

France is a leader in tourism, aircraft manufacturing, pharmaceuticals and industrial production. The country offers a range of investment opportunities, particularly through its ambitious “France 2030” strategy, which aims to help key industries transform faster through innovation, and to position the country as a leader in tomorrow’s world. However, France faces challenges in the form of substantial public debt and the economic strain of addressing pension reforms. Despite these hurdles, the country’s strong economic fundamentals and commitment to sustainable development may appeal to investors.

Germany
Name of exchange: Frankfurt Stock Exchange (FWB)
Currency: Euro
GDP: US$4.71 trillion (2024)
GDP growth since 2014: 18.64%
Top imports: Natural gas, cars, garments, vehicle parts/accessories, crude petroleum
Top exports: Cars, packaged medicine, vehicle parts/accessories, vaccines, plastic products

Located in the heart of the EU and eurozone, Germany is well-known for its robust automotive, chemical, engineering, finance and green energy industries. There may be investment opportunities in advanced manufacturing and renewable energy but economic growth has been slowed by an energy crisis and tightening labour market. Challenges aside, Germany’s reputation for innovation makes it a popular destination for investment capital.

Australia
Name of exchange: Australian Securities Exchange (ASX)
Currency: Australian dollars
GDP: US$1.8 trillion (2024)
GDP growth since 2014: 23.29%
Top imports: Refined petroleum, cars, garments, trucks, plastic products
Top exports: Coal, iron ore, natural gas, gold, wheat

Australia’s diverse economy and beneficial location in the Asia-Pacific offer unique investing possibilities. The country has robust mining and export sectors – it is the world’s largest exporter of coal, iron ore and diamonds – while maintaining a service-driven economy. Australia has a strong property market and growing hydrogen and critical mineral sectors, and it’s a leader in renewable energy. On the other hand, Australia tends to have high operational costs and a complicated regulatory framework. Overall though, the country’s economic stability makes it a competitive market.

Japan
Name of exchange: Tokyo Stock Exchange (TSE), Nagoya Stock Exchange (NSE ), Osaka Exchange (OSE)
Currency: Japanese yen
GDP: US$4.07 trillion (2024)
GDP growth since 2014: -16.94%
Top imports: Crude petroleum, natural gas, coal, integrated circuits, garments
Top exports: Cars, machinery, integrated circuits, vehicle parts and accessories, refined petroleum

As the world’s fourth-largest economy, Japan is a highly diversified, trade-oriented economy. It excels in technology, automotive manufacturing and electronics. The country’s near-zero central bank rates present favourable borrowing conditions. Challenges come in the form of high public debt, real wage declines amid inflation and a depreciating yen. Despite these issues, the country’s innovation-driven industries and strategic global position make it an attractive destination for investment, particularly in advanced technology and renewable energy.

Singapore
Name of exchange: Singapore Stock Exchange (SGX)
Currency: Singapore dollar
GDP: $530.71 billion (2024)
GDP growth since 2014: 68.55%
Top imports: Integrated circuits, refined petroleum, crude petroleum, gold, machinery
Top exports: Integrated circuits, refined petroleum, machinery, gold, gas turbines

Singapore’s high-income, service-driven economy is a global hub for finance and trade. The Singaporean government’s substantial investment in education helps maintain low unemployment and fosters innovation. Singapore’s market may offer opportunities in finance, advanced manufacturing and green technology, however its reliance on global markets might expose it to risk in the form of trade disruption. Overall, the country is stable adaptable and has world-class infrastructure.

RBC Direct Investing now grants access to 18 domestic and global markets

International exchanges you can now trade and invest in online: Hong Kong exchange; Euronext Paris; London Stock Exchange; Frankfurt Stock Exchange

International exchanges you can trade and invest in by phoning an Investment Service Representative: Japanese exchanges: Tokyo Stock Exchange, Nagoya Stock Exchange and Osaka Exchange; the Australian Securities Exchange; the Singapore Stock Exchange; European exchanges: Swiss Exchange (Switzerland), Euronext Brussels (Belgium); Borsa Italiana (Italy); Euronext Amsterdam (Netherlands); Euronext Lisbon (Portugal); Vienna Stock Exchange (Austria); Bolsa de Madrid (Spain); Nasdaq Helsinki (Finland); Athens Stock Exchange (Greece)

*Sources:

GDP data: International Monetary Fund, "IMF Datamapper GDP, current prices, Billions of U.S. dollars", December 2024

Import Export data: Central Intelligence Agency, "The World Factbook, Countries, Economy", December 2024