036800.KQ - Nice Information & Technology

[dabuff]

Appreciate the detailed responses. Have any US-based investors had luck opening accounts on these platforms?

[RetroRanger]

I upvote this too. The Account process states you even have to use a personal check for initial deposit (Minimum 10.000hkd), i dont even know how to get a check from my bank 2021

 

So many questions for a simple broker account

 

[Cicero]

 

Some of their commissions could be considered high. That's why I use Boom mostly to access markets not available with other brokers.

 

 

Thank you. That is helpful. How about the other fees? I have seen that the account can't hold KRW but initial purchase price and subsequent dividends are FXed into USD. Is the rate fair?

 

How about other fees relating to corporate actions, dividends, custodian etc? Sorry to be so nitty gritty, but I have seen that some brokers in the region really try to charge fees quite sneakily.

 

OCBC Securities offers Korean stocks as well btw.

[Jurgis]

Maybe you all don't care about this  ::), but non-US brokerage account for US residents leads to some fun tax forms and consequences.  8) Just PSA, it's your life and your taxes.

[Genyi]

Thank you. That is helpful. How about the other fees? I have seen that the account can't hold KRW but initial purchase price and subsequent dividends are FXed into USD. Is the rate fair?

 

My last Korean dividend was exchanged into USD at: 2020/04/03 Sold KRW @ USD 0.00080775 on 2020/04/03

 

(This was from LG H&H pref. shares 51905... I am not a shareholder in Nice Information & Technology yet)

 

When I check this date at https://www.xe.com/currencytables/?from=KRW&data-ipsquote-timestamp=2020-04-03 the mid-market rate is 0.0008067238, but most likely that's the US end-of-day rate and my KRW were sold earlier in the day or already on april 2nd US time. The 2020-04-02 rate on that website is 0.0008142364. Without knowing the exact time of the FX transaction, it's hard to verify exactly, but whatever margin they take seems low compared to the daily randomness of the FX rate.

 

How about other fees relating to corporate actions, dividends, custodian etc? Sorry to be so nitty gritty, but I have seen that some brokers in the region really try to charge fees quite sneakily.

 

The fees are listed under the 'Customer Service' button. I haven't been charged any fees not mentioned on that page. Except for the somewhat elusive FX rate, which I explored above.

 

[Genyi]

I am not a US citizen or US resident, so I can't comment on the specific regulatory consequences here.

 

I upvote this too. The Account process states you even have to use a personal check for initial deposit (Minimum 10.000hkd), i dont even know how to get a check from my bank 2021

 

They provide two alternatives to the cheque. I actually visited their office in person to sign the forms, since I had a stop-over in Hong Kong anyway. I gained some confidence by seeing their offices and chatting with the representative. Admittedly, that's hard to do now, but they also provide the 'witness' option to verify your signature and identity.

 

If you can't proceed with Boom, there are more options to explore: https://the-international-investor.com/comparison-tables (Note that some info here may be outdated, but it could still provide a useful starting point).

 

Is it worth all the hassle? My main broker is Interactive Brokers. They have had Korean futures for years already, but for some reason Korean stocks were never made available. Since smaller markets such as Latvia and Hungary are added all the time, I conclude there must be some insurmountable hurdle for IB to add Korea. Hence, I keep using Boom for Korean stocks. Also, I appreciate having access to markets as Malaysia, Thailand, Indonesia and Taiwan. I do look at stocks in these countries and if there is an obvious bargain I can act immediately.

 

[RetroRanger]

Thanks :) so you deposit money every time via Check or online Transfer? I have read you need to write an e-mail or a deposit notification each time. This seems ultra old school .

 

[Cicero]

Thank you @ Genyi. Very helpful. I asked IB why they don't do Korea. To be honest I did not really understand the answer, but it seemed to have something to do with the disclosures on their customers to the regulator.

 

Spoke to a few people on risk of a broker in HK going under and exposure if that happens. Thought I'd share. Not saying that Monex Boom is at risk, but probably good to think through eventualities. By no means an expert on this, so if anyone heard anything different please let me know, because that means I am probably wrong:

 

# if a broker in HK fails any investor irrespective of residence is entitled to compensation by the Investor Compensation Fund. Three caveats: 1. covers only stocks not cash 2. covers only HK and some Mainland stocks (through stock connect) 3. capped at about $70k USD.

# the fund's accounts are public. Just clicked through a few of them and based on that sample seemed like they do make payouts almost every year. Link to website: https://www.hkicc.org.hk   

# I came to this assuming that you always get your stock in the event of broker failure unless the broker did something they were not supposed to do (i.e. strict separation of client assets), but if you look at the example calculations of the Investor Compensation Fund, then it sounds like the ICFs assumption is your stocks are not held separately and are impaired in the event of the bankruptcy of the broker. Quite possible that I read something into this that is not there, but it did give me pause. Link to the calculation: https://www.hkicc.org.hk/investor/fund_cal_c1_e.htm

# Compliance record of brokers in Hong Kong is public and the regulator seems to be fairly trigger happy with public censures. For what it's worth, the compliance record of Monex Boom seems unblemished. Link to the regulator's page on boom: https://apps.sfc.hk/publicregWeb/corp/AEF808/ro

# Boom uses Korea Investment and Securities as custodian in Korea. They are basically a Korean broker, but understand one of the larger ones. Baa2 rated by Moody's

 

[Genyi]

Thanks :) so you deposit money every time via Check or online Transfer? I have read you need to write an e-mail or a deposit notification each time. This seems ultra old school .

 

I deposit and also withdraw money through international bank transfers. I always submit the deposit notification, although I am pretty sure they will identify my payment without it too. A Chinese person can have different names in Mandarin and his/her local dialect. Also translation from Chinese to pinyin can be ambiguous. Plus there's traditional and simplified Chinese writing in Hong Kong. So, for some cases they will need help crediting the payments to the right account. If all your data is unambiguous in this context, you can probably ignore that notification, but it takes 1 minute to fill in anyways.

[Genyi]

Thanks :) so you deposit money every time via Check or online Transfer? I have read you need to write an e-mail or a deposit notification each time. This seems ultra old school .

I deposit and also withdraw money through international bank transfers. I always submit the deposit notification, although I am pretty sure they will identify my payment without it too. A Chinese person can have different names in Mandarin and his/her local dialect. Also translation from Chinese to pinyin can be ambiguous. Plus there's traditional and simplified Chinese writing in Hong Kong. So, for some cases they will need help crediting the payments to the right account. If all your data is unambiguous in this context, you can probably ignore that notification, but it takes 1 minute to fill in anyways.

[nik_explores]

Considering the parent company of 034310.KQ NICE HOLDINGS is trading at quite a holding discount.  I think that could be a better play as well.

 

I agree on NICE Holdings.  I’ve owned several of the NICE subsidiaries (NICE Information Services, NICE D&B, NICE I&T) for a long time but never paid much attention to the holding company.  It was just too tough to analyze their (or any other Korean holding company’s) filings when I don’t speak the language.  That being said, I’ve been buying NICE Holdings recently.  I still don’t fully understand a few things (private equity put agreements, manufacturing strategy, etc.), but I made an exception because of the quality of the assets. 

 

I would be happy to talk about NICE with anyone interested.

 

 

Another note is that Pabrai funds is the 8.7% holder of NICE Holdings recently. The company looks solid as well. It has a recent VIC writeup

https://www.valueinvestorsclub.com/idea/Nice_Holdings/9451338100#description

 

PIF owns both NICE Holdings and NICE I&T.

 

Does any one know how to check the disclosures of institutional buyers ?

 

+5% interests are disclosed on DART.

 

 

Thanks @Poor Charlie for the help to check on DART. Now based on my today's check, Pabrai has reduced his holdings in NICE I&T and increased on NICE Holdings in the second half of 2020.  Dhandho funds is now the largest shareholder after the Won-Woo Kim Family.

 

 

[nik_explores]

Considering the parent company of 034310.KQ NICE HOLDINGS is trading at quite a holding discount.  I think that could be a better play as well.

I agree on NICE Holdings.  I’ve owned several of the NICE subsidiaries (NICE Information Services, NICE D&B, NICE I&T) for a long time but never paid much attention to the holding company.  It was just too tough to analyze their (or any other Korean holding company’s) filings when I don’t speak the language.  That being said, I’ve been buying NICE Holdings recently.  I still don’t fully understand a few things (private equity put agreements, manufacturing strategy, etc.), but I made an exception because of the quality of the assets. 

I would be happy to talk about NICE with anyone interested.

Another note is that Pabrai funds is the 8.7% holder of NICE Holdings recently. The company looks solid as well. It has a recent VIC writeup
https://www.valueinvestorsclub.com/idea/Nice_Holdings/9451338100#description

PIF owns both NICE Holdings and NICE I&T.

Does any one know how to check the disclosures of institutional buyers ?

+5% interests are disclosed on DART.

Thanks @Poor Charlie for the help to check on DART. Now based on my today's check, Pabrai has reduced his holdings in NICE I&T and increased on NICE Holdings in the second half of 2020.  Dhandho funds is now the largest shareholder after the Won-Woo Kim Family.

[Genyi]

Thanks Cicero, you have been diving a lot deeper as I did at the time.

 

# I came to this assuming that you always get your stock in the event of broker failure unless the broker did something they were not supposed to do (i.e. strict separation of client assets), but if you look at the example calculations of the Investor Compensation Fund, then it sounds like the ICFs assumption is your stocks are not held separately and are impaired in the event of the bankruptcy of the broker. Quite possible that I read something into this that is not there, but it did give me pause.

 

I always made the same assumption as you did. I understand my cash balance is at a certain risk, but I wonder why they don't give customers their long positions in case of a default. I also wonder whether you give up your rights as a creditor in the bankruptcy procedure of the failed broker once you accept compensation from this fund.

 

Food for thought since my balance is above 500,000 HKD right now. But regardless, Korean stocks are not covered by the fund, so your last bullet point may be the most important one. I wonder whether any Korean broker welcomes foreign customers, so that at least the broker default risk is limited to 1 organization. Or maybe petition Interactive Brokers to access the Korean market?

 

[Genyi]

Thanks Cicero, you have been diving a lot deeper as I did at the time.

# I came to this assuming that you always get your stock in the event of broker failure unless the broker did something they were not supposed to do (i.e. strict separation of client assets), but if you look at the example calculations of the Investor Compensation Fund, then it sounds like the ICFs assumption is your stocks are not held separately and are impaired in the event of the bankruptcy of the broker. Quite possible that I read something into this that is not there, but it did give me pause.

[RetroRanger]

Swissquote seems to support korean stocks. Their screener shows actions to buy NICE holdings. 
For me this would be the best option, since swissquote has the same securities as germany with banking .
( okay i verified it, SADLY not tradable, so i am out. I know Boom is a long existing bank with backup in Japan, BUT i dont want to put my money at that amount of risk :/ )
DAMN why is it so freaking hard to invest (safely) in south korea.

Boom responded after my security question:

If you mainly buy Korea stock, it is not under the Fund protection, unfortunately.
However, HK broker are required by law to segregate client's assets from that of the firm. Client stocks/ cash are deposited in a segregated Trust account or Client account
Legally speaking, in case of bankruptcy of the broker firm, only the client themselves could claim after the assets inside these Trust account./ Client Account
The shareholder, creditors of the firm cannot claim after the assets inside the Trust account/ Client account, as they are NOT considered the properties of the broker firm

Under this legal arrangement, the client should still be able to get back their assets, as long as these stocks/ cash are deposited within the Trust account/ Client account as per the legal requirement


Back to the topic.
Anyone has a good writeup about NICE Holdings besides the valueinvestorclub article?

[Genyi]

However, HK broker are required by law to segregate client's assets from that of the firm. Client stocks/ cash are deposited in a segregated Trust account or Client account

RetroRanger, thanks for taking this up with Boom. Do you understand the above to mean that also client stocks traded outside of HK/China, such as Korea, are to be held in segregated accounts? Or does the HK regulator only enforce that for HK/Shanghai/Shenzhen stocks?

Tbh, the issue keeps bugging me. Why is there a huge rescue fund when it would be much more efficient to check regularly whether all licensed brokers keep their clients' accounts segregated.

Also, the rescue fund has honored claims to clients of 6 defaulted brokers since 2006: https://www.hkicc.org.hk/claims/notice_e.htm This seems a rather large number of brokers who had not implemented or sustained the mandatory practice of keeping client accounts segregated.

[Genyi]

However, HK broker are required by law to segregate client's assets from that of the firm. Client stocks/ cash are deposited in a segregated Trust account or Client account

RetroRanger, thanks for taking this up with Boom. Do you understand the above to mean that also client stocks traded outside of HK/China, such as Korea, are to be held in segregated accounts? Or does the HK regulator only enforce that for HK/Shanghai/Shenzhen stocks?

Tbh, the issue keeps bugging me. Why is there a huge rescue fund when it would be much more efficient to check regularly whether all licensed brokers keep their clients' accounts segregated.

Also, the rescue fund has honored claims to clients of 6 defaulted brokers since 2006: https://www.hkicc.org.hk/claims/notice_e.htm This seems a rather large number of brokers who had not implemented or sustained the mandatory practice of keeping client accounts segregated.

[Cicero]

I feel like we are hijacking this thread. I started a new topic in the general discussion section for anyone interested in opening an account to invest in Korean stocks.

I did reach out to several Korean Brokers. It seems theoretical possible to open an account, but it sure does not seem easy. Will let you know how it goes in the new thread.

[koowoonmo]

The advantage of trading with korean broker is that you can trade most of the stocks except for those for the foreign investor restricted stocks. However, you have to give them orders like old school. If you are value investor don't trade much but want to execute orders at certain price range, korean broker is a good option. If you are looking for one, you can contact koowoonmo@ebestsec.co.kr for more details. (fees, monthly statements, and etc)

[Cicero]

Last digression on Korean stock brokers, I promise: 

Understand from Koowoonmo that a member of this board is a client of Koowoonmo who pointed him into the direction of the board (thank you!). If you read this can you message me? He seems very professional and I have nothing but good things to say so far, but would be great to validate with someone who has more experience with him. Thanks for your help!

[Jakusimo]

Hello!

I am new here and also new student of NICE :) Thank you for such a broad discussion. Since I am from Europe(Lithuania), I have little understanding of the Korean market. Do you have any recommendations for the Korean market (books, blogs, articles) about the economy, politics, history?

Do you know if there is more coverage about NICE companies besides this discussion, official IR materials, and VIC?

[Poor Charlie]

Quote

Do you have any recommendations for the Korean market (books, blogs, articles) about the economy, politics, history?

How Asia Works

Asia’s Next Giant

Seoul Man

The Birth of Korean Cool

[Jurgis]

Quote

The Birth of Korean Cool

Oppan Gangnam Style!

[nik_explores]

Assuming we are talking about Nice Holdings KRX: 034310 needs its own post. Not sure if we keep discussing it here or create a new post for this another ticker. I read the VIC writeup on it. Looks quite interesting. 

[Jakusimo]

I agree that Nice Holdings should have a separate topic, since there are many subsidiaries which can be discussed.

Off-topic remark/question about arbitrage in Korea. I found an article that Li Lu did some Korean Preferreds arbitrage. In the article mentioned a few examples. Did anybody have any experience or thoughts on this approach?

https://seekingalpha.com/article/3980970-using-li-lu-introduction-to-asian-equities

I didn't find preferred stocks on Nice holdings

https://www.forbes.com/sites/lukeschiefelbein/2018/02/01/why-korean-preferred-shares-trade-at-a-discount/

Edited May 5, 2021 by Jakusimo