What’s a dual-listed company?
Sometimes, you’ll come across a public company that’s ‘dual listed’. This means its shares are traded on two different stock exchanges.
For example, a company could be listed on both the New Zealand Stock Exchange (NZX) in New Zealand and the Australian Securities Exchange (ASX) in Australia.
Let’s look at why companies dual list and what it means for you as an investor.
Dual-listed NZ companies
Many household brands are listed in both New Zealand and Australia. They include the likes of:
Auckland International Airport
Air New Zealand
Now, let’s take a look at why companies dual list.
Why companies dual list
First, it’s generally easier for investors to invest in companies that are listed on their country’s exchange.
If a company wants its shares to be available to a wider range of potential investors, it makes sense for it to list in more than one country. That’s why some NZ companies list on both the NZX and the ASX. Listing on the ASX makes it easier for Australian investors to buy and sell their shares, and to turn their shares into cash.
Access to a broader and more diverse group of investors also gives the share price more price support. More price support from a broad range of investors can give a clearer view of what the market thinks a company is worth.
Dual listing could also make it easier for a company to raise cash. With access to a greater pool of prospective investors, they can raise a lower amount of money from each investor to meet their funding goals.
What dual listing means for investors
Generally, it’s easier and cheaper to invest in companies on local exchanges than it is to invest in companies on overseas exchanges.
Investing in overseas companies means buying foreign currency—to do this, you need to exchange your local currency into the foreign currency, which has fees. Additionally, investing in overseas investments might affect the taxes you need to pay.
If a company is listed in two countries—and you live in one of those two countries—then you might consider investing in its local shares. You’re still buying the exact same company’s shares, but you won’t deal with exchanging currency or potential overseas tax.
Of course, this doesn’t mean you have to only invest in local companies. But it might be an easier and cheaper option for you.
Overseas and local shares are (mostly) the same
A company’s overseas and local shares both represent an equal-sized ownership of the underlying company. They may have different prices, but once you factor in things like currency exchange rates, the price should become almost exactly the same.
Lots of companies dual list. It’s a useful way to access a broader, more diverse range of investors than they might have on just one exchange.
But for you as an investor, the fundamentals of the company remain the same, and you still get the ease of investing locally. So if there’s a dual-listed investment you want to buy, you might consider looking at the version closer to home.
Ok, now for the legal bit
Investing involves risk. You aren’t guaranteed to make money, and you might lose the money you start with. We don’t provide personalised advice or recommendations. Any information we provide is general only and current at the time written. You should consider seeking independent legal, financial, taxation or other advice when considering whether an investment is appropriate for your objectives, financial situation or needs.