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Diversifying Globally with Singapore Stocks

Getting geographic exposure beyond Singapore’s shores can be an important component of building a diversified portfolio.

But, it may not be necessary to invest in companies in foreign exchanges to do so.

For the Singapore investor looking to gain foreign exposure, there are many listed companies in Singapore which have major overseas operations.

International plays

Take Ascott Residence Trust (SGX: A68U) for instance. The real estate investment trust is a wholly owned subsidiary of Capitaland Limited (SGX: C31) and it focuses mainly on serviced residences and rental housing properties. In 2014, it derived almost 90% of its revenue from countries like China, Vietnam, Japan, France, and the United Kingdom.

Another good example would be a familiar company to many Singaporeans, Singapore Telecommunications Limited (SGX: Z74). The well-known local telco actually derives a sizable amount of its revenue and profits from outside Singapore. In Singtel’s financial year ended 31 March 2015, 31% of its free cash flow came from its associates and joint ventures located in countries like India, Philippines, Indonesia, and Thailand.

Here’s one more global player: Comfortdelgro Corporation Ltd (SGX: C52). In 2014, the land transport outfit reported that close to half of its operating profit came from outside of Singapore, primarily from the United Kingdom / Ireland, China, and Australia.

Foolish summary

Venturing overseas may lead to a longer growth path for companies listed in Singapore. That said, investors have to be mindful of the risks that come with it. For instance, companies will need to deal with foreign regulations and manage exchange rates.

Foolish (capital ‘F’!) investors will have to weigh the pros and cons of companies with major foreign exposure before making any investing decision.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.