Many foreign companies trade on the OTC markets in the U.S. instead of the organized exchanges like NYSE or NASDAQ. Some of these firms fled the organized exchanges to the OTC market in the recent past to avoid higher reporting requirements due to the Sarbane-Oxley Act, higher listing fees, low trading volumes and other reasons. So US investors looking to gain exposure to foreign markets have to explore opportunities available via the OTC markets and not simply restrict themselves to the stock listed on the exchanges.
A common misconception among investors is that companies trading on the OTC markets are penny-stocks and are prone to all types of fraud. However that is not true since many world-class foreign firms trade on the OTC markets.
The table below lists the Top 10 OTC-traded Foreign Stocks by Market Capitalization:
| S.No. | Company | Ticker | Market Capitalization (as of Nov 1, 2013) | Industry | Dividend Yield (as of Nov 1, 2013) | Beta |
|---|---|---|---|---|---|---|
| 1 | Roche Holding Ltd. | RHHBY | $191.3B | Pharmaceuticals | 2.79% | +0.8 |
| 2 | Bayer AG | BAYRY | $102.1B | Pharmaceuticals | 2.01% | +1.2 |
| 3 | LVMH Moet Hennessy Louis Vuitton SA | LVMUY | $95.6B | Textiles, Apparel & Luxury Goods | 1.98% | +1.4 |
| 4 | BASF SE | BASFY | $95.1B | Chemicals | 3.29% | +1.7 |
| 5 | Australia and New Zealand Banking | ANZBY | $86.7B | Commercial Banks | 4.68% | +1.6 |
| 6 | National Australia Bank Ltd. | NABZY | $79.4B | Commercial Banks | 5.25% | +1.7 |
| 7 | Allianz SE | AZSEY | $76.0B | Insurance | 3.53% | +2.0 |
| 8 | Volkswagen AG | VLKAY | $72.2B | Automobiles | 1.86% | +1.4 |
| 9 | Deutsche Telekom AG | DTEGY | $70.3B | Diversified Telecommunication Services | 5.86% | +0.9 |
| 10 | BG Group plc | BRGYY | $68.9B | Oil, Gas & Consumable Fuels | 1.93% | +0.9 |
A few observations:
- Swiss-pharma giant tops the list with a market cap of over $191.0 billion.
- Five of the ten companies are from Germany. Bayer (BAYRY). BASF (BASFY), Allianz (AZESY), Volkswagen (VLKAY), Deutsche Telekom (DTEGY) are also components o f the benchmark DAX index.
- Australian banks Australia and New Zealand Banking (ANZBY) and National Australia Bank Ltd (NABZY) have dividend yields are over 4% and 5% respectively and are excellent choices for long-term investment.
Disclosure: No Positions
