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Same company listed on exchanges in different countries - any difference?

  • 12-12-2019 8:49pm
    #1
    Bob24
    Registered Users, Registered Users 2 Posts: 10,905 ✭✭✭✭


    Looking at a Canadian company which has shares trading in Toronto in CAD, but also New York in USD and Frankfurt in EUR.

    Besides the stock being listed in a different currency, does it make any material difference for someone to get in on an exchange rather that another.

    For exemple am I right that regardless of which exchange you buy it from, the withholding tax on dividends will be the Canadian one and whichever additional Irish tax amount revenue expects will be the same, or would the country where the stock is listed have tax implications?

    The other thing I was thinking of is a risk of having a less liquidity on some of the exchanges, or even a risk of the stock one day being delisted on some of its non-primary markets. are these a cause for concern in practise?

    And in short, for an EU resident does it make a difference to buy in the original market, in the US, or in the EU, and if yes what is the best option?


Comments

  • #2
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,605 Mod ✭✭✭✭Jim2007


    Bob24 wrote: »
    Besides the stock being listed in a different currency, does it make any material difference for someone to get in on an exchange rather that another.

    For the most part no, you are buying the exact same share in terms of ownership and rights. In a couple of cases it is not the case. Check and make sure this is not one of those cases - off hand I cannot remember a Canadian company that falls into this category, but I've been out of the industry now for a while.


  • #3
    BrokenArrows
    Registered Users, Registered Users 2 Posts: 7,501 ✭✭✭BrokenArrows


    Mostly the same shares.
    However on different exchanges you obviously expose yourself to currency risk, different taxation, liquidity, economic issues of that country affecting the stock market.


  • #4
    Bob24
    Registered Users, Registered Users 2 Posts: 10,905 ✭✭✭✭Bob24


    Thanks both.
    BrokenArrows wrote: »
    Mostly the same shares.
    However on different exchanges you obviously expose yourself to currency risk, different taxation, liquidity, economic issues of that country affecting the stock market.

    When you say different taxation, are you referencing just to things like potential stamp duty on stock purchase? (what I am not 100% clear about it taxation of dividends - my understanding is that it purely depends on the home jurisdiction of the the company and not where the stock is listed, is that correct?)


  • #5
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,605 Mod ✭✭✭✭Jim2007


    BrokenArrows wrote: »
    Mostly the same shares.
    However on different exchanges you obviously expose yourself to currency risk, different taxation, liquidity, economic issues of that country affecting the stock market.

    Income tax differences will most likely wash out due to double tax agreements, it might be a bit more of hassle and arbitrage should account for most of the other issues, with a little time delay. Which leaves currency risk and depending on company that may not be such a big issue either.


  • #6
    Bob24
    Registered Users, Registered Users 2 Posts: 10,905 ✭✭✭✭Bob24


    Jim2007 wrote: »
    Income tax differences will most likely wash out due to double tax agreements, it might be a bit more of hassle and arbitrage should account for most of the other issues, with a little time delay. Which leaves currency risk and depending on company that may not be such a big issue either.

    Thanks. I don’t get the concept of currency risk depending on which exchange you choose though.

    If the CAD depreciates 10% against the euro and the CAD price of the stock remains the same in Toronto, then the EUR price of the stock in Frankfurt will drop by 10% right? So in the end regardless of holding the stock in Toronto or in Frankfurt the final result is the same?


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