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Forex Benefits Of Foreign Stock Trading
When investing overseas be aware of the potential Forex benefits of foreign stock trading. The idea Forex benefits of foreign stock trading are to profit from the stock and profit from changes in the rate of exchange. It is also possible to use the Forex market to move assets out of one currency simply to invest at a higher rate of return and then to return assets to the original currency after a profit has been made. This is what is commonly done in the Yen carry trade. Investors convert their strong Yen into dollars, for example, and invest in US treasury bills, stocks, or other investments in the USA. When they have made a sufficient profit these investors cash out of their investments, convert their dollars back to Yen and count their profits. If they time the Forex market accurately these investors also enjoy Forex benefits of foreign stock trading, Treasury purchases, and the like. As looser Chinese currency controls become the norm a carry trade with currency profits may be possible with the Yuan as well.
The seemingly eternal Euro Zone debt crisis may offer the best example of Forex benefits of foreign stock trading. The recent elections in both Greece and France have shown that voters disagree with the austerity measures agreed upon to bail out Greece and other countries. The Greek debt write-off requirements have now resulted in a nearly sure defeat for the party and individuals instrumental for the Greek side of the deal. The strict austerity measures in place across Europe are likely to take the EU into a recession this year. Now, if the various parts of the bailout deals in place in Europe unravel the situation could be even worse. Many expect the EU to come apart. If this is so the Euro will fall and, probably, so will European stocks. However, remember that a major part of the problem for Europe, as well as the USA, is the value of the Euro (or dollar) against the Yuan, Yen, Taiwanese dollar and other Asian currencies. A falling Euro will make European products more competitive on world markets. A falling Euro Zone stock market will very likely result in a number of very fairly priced stocks. If this scenario holds an investor could wait for the Euro to fall and buy Euros with dollars. Then, buy cheap Euro Zone stocks with his Euros. Then, when the situation finally rectifies itself, sell the stocks for a profit in Euros and sell the now-more-valuable Euros for dollars. Think Forex benefits of foreign stock trading.
Other nations that are currently hurting in the slow recovery from the recession include the BRIC group, Brazil, Russia, India, and China. Chinese exports are down and there as real possibility of a Chinese real estate crash. India and Brazil have each seen a marked drop off in their rates of growth.