Top 5 investment opportunities beyond the US stock market in 2023
The USA tends to be at the forefront of investor's minds – but it's far from the only opportunity out there. We take a look at some of your other options.
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For new and long-term investors alike, the USA is sometimes seen as the pinnacle of investing.
This isn't surprising – after all, at time of writing, it's the world's largest economy.
But it's a big globe, and there are plenty of opportunities to be found in investing outside of the USA.
We asked Josh Gilbert, market analyst at eToro, for his thoughts.
Although the US dominates global markets, Gilbert points to this as being due to a heavy reliance on tech.
"Tech is more than 40% of US markets, double the rest of the world," says Gilbert. "So international markets can provide a more diversified portfolio for investors."
Gilbert also notes that overseas markets' mix of different investment opportunities, lower valuations and greater diversification can offer attractive options for investors.
Getting set up for investment
In a moment, we'll take a look at a number of markets that can present opportunities for Australian investors.
But it's important to have the right tools for investing in these markets. That starts with your trading platform.
There are a lot of options out there, and every trader will have their own unique needs and preferences.
However, it's worth looking for one that offers a range of different markets and asset classes, as well as including features relevant to you.
Let's look at eToro as an example. You're able to trade across 16 markets around the world, as well as a wide variety of different asset classes. eToro also allows traders to invest in local companies with 0% commission.
Additionally, when you join you'll also receive access to a demo account.
This provides you with $100,000 of virtual money, which allows you to practise your trading strategies, based on real-world data.
Educational and news resources are also available, helping you stay up-to-date and allowing you to hone your trading skills.
Investment opportunities outside the USA
1. London Stock Exchange – UK
The UK is a common jumping-on point for Australian investors.
The common language, close ties to European markets and a range of significant industries all make it an attractive option.
"The FTSE100 is broadly diversified away from technology stocks, with a big weighting to defensive assets and sectors such as healthcare and energy," says Gilbert.
These factors have paid dividends in real-world terms, too. Historically, UK stocks have tended to outperform many other countries in times of uncertainty.
"During 2022, the UK took the crown of the best-performing major stock index," says Gilbert.
2. Hang Seng Index – Hong Kong
Hong Kong has been a business powerhouse for hundreds of years, thanks to its natural harbour.
However, the island hasn't been content to stay solely confined to the import/export market.
Today, Hong Kong is home to one of the most thriving economies across Asia, with a heavy focus on the tech sector and a vibrant trading market.
Bigger picture, Gilbert does note that China's economic growth is faltering at the moment. However, further stimulus is set to be rolled out, which could have a transformative effect in the near future.
"Stimulus could spell good news for Hang Seng equities," says Gilbert.
3. Paris Exchange – France
Gilbert points to luxury brands as a significant opportunity for investors on the Paris Exchange, considering the French equity markets.
"The global luxury business grew by a fifth last year to €353 billion in sales," says Gilbert. "That's a 70% rise in just the past decade."
Coupled with this, global household wealth doubled in the same time.
"The number of luxury consumers rose to an estimated 400 million, equal to 5% of the global population," says Gilbert.
It's a shift that's translated to day-to-day market movements, too.
LVMH – the umbrella company for 75 luxury brands across 6 different segments – has recently become Europe's largest listed company, with a market cap of around €500 billion.
4. Frankfurt Stock Exchange – Germany
As with the London Stock Exchange, the Frankfurt Stock Exchange can help serve as a gateway to wider European markets, while also offering the potential for significant yields and growth on its own terms.
There's also a significant start-up culture in the city, across a wide range of verticals.
With major industries including pharmaceuticals, financial services and tech, the Frankfurt Stock Exchange presents a diverse range of investment options.
5. ASX – Australia
"There is still a strong bias toward local equities, especially from Australian retail investors," says Gilbert. "Being diversified across both markets can be the ingredients for a great portfolio with a mix of growth, defense and of course, dividends."
Options like eToro's AussieEconomy portfolio allow for entry points into the ASX, both for new investors looking to get started, and more experienced investors keen to expand their portfolio into new territories.
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