We sat down with Alex Douglas, the Managing Director of Monex, about not only his rise but also how Monex is transforming the local brokerage scene.
Hi Alex! You are the Managing Director of Monex Securities Australia. Can you tell us a little bit about your organisation?
Monex Securities Australia provides an online share trading platform with access to over 50,000 listed securities in 12 markets around the world. We are a part of the Monex Group, which is publicly listed on the Tokyo Stock Exchange and is the third largest online broker in Japan. Other brokerage businesses within the group include Monex BOOM in Hong Kong, TradeStation in the USA and the crypto-currency exchange, CoinCheck in Japan.
How long have you been in finance? Was it always what you wanted to do?
My first exposure to the markets was during a week of work experience in 1983 while still at school. The Treasurer of a large international computer firm sat me down with a stack of newspapers and some graph paper and asked me to plot currency price movements by hand. Ever since then I have been fascinated by the markets. In the years since, I have been a foreign exchange voice broker, I have worked in the trading pits of the Sydney Futures Exchange and I have worked as an analyst both in Australia and Singapore. Working at Monex I am able to bring together and utilise the skills and experience collected over several decades. It’s hard to imagine doing anything else.
How does Monex simplify international trading?
By leveraging the assets of the broader Monex group of companies, we are able to provide clients with access to 12 international markets all from one trading account. Our integrated software simplifies the necessary currency conversions and our size enables us to provide significantly lower rates of brokerage that have traditionally been available in Australia.
Why do Australian investors tend only to trade in Australian shares? Is this a particularly Australian phenomenon or do most countries tend to be insular when it comes to the share market?
Home Country Bias is the tendency for investors to place the majority of their funds into names and brands that they are familiar within their local market. While this happens all over the world, the statistics show that Australians are more prone to this limitation on their investments than just about anybody else in the world. In part, this is related to the way in which dividends are taxed in Australia but it is also true that in the past it has been very difficult and very expensive for Australians to access international markets.
If I’m new to investing, why should I invest in shares? Why should I risk the stock market when I could put it into something more secure like bonds or even superannuation?
While stock market returns can be volatile over the short term, they are generally quite strong over the medium to longer term. Nobody would suggest that all of your investments should be placed into one asset class. Diversifying your investments by including shares may actually reduce the overall level of risk in your portfolio while also boosting longer term returns.
What are the risks for Australian investors in overseas investment? Should we be concerned about political and social instability?
Of course, it pays to be aware of currency fluctuations and the broad economic and political conditions of the countries you are investing in. While it can be harder to obtain information about smaller companies in far off lands, there are many globally recognised companies that can only be traded in foreign markets. On the whole, many of the perceived risks have more to do with “fear of the unknown” rather than specific, tangible risks.
On the flipside, what are the advantages?
With Australian listed companies making up less than 3% of global market capitalisation, investors that hold all of their money in Australia effectively have all of their eggs in one, very small, basket. Investing overseas opens up opportunities to invest in sectors that simply aren’t represented in any meaningful way in Australia. Even investing in some successful Australian companies, such as Atlassian, requires investors to participate in offshore markets. This access to new markets and a broader range of sectors gives investors the opportunity to diversify their investments. It is widely accepted that a certain amount of diversification can reduce the overall level of risk on an investment portfolio.
Anything else we should know?
In addition to meeting the needs of personal investors, Monex Securities Australia will soon be accepting corporate and trust/SMSF clients. We are also able to implement B2B solutions to help other money managers and brokers provide their clients with access to offshore markets at a reasonable cost.