In our last blog entry about the characteristics and differences between an investment in an emerging market and one in a developed market. We will today look at this topic in terms of administrative ease.
You will not be surprised to find out that opening an account and investing in a developed market (especially if this market happens to be the one of your own country) is much simpler than investing in an emerging or frontier market (especially when you do not have personal link to this country).
Opening a brokerage account in the United Kingdom for instance can be done quickly and is a relatively simple process.
In order to do so, the main step is for the broker to make the appropriate checks on your identity and the source of your funds. In this respect, brokers have what we call
experts whose job is to make sure that you are allowed to invest in stocks in the desired stock markets and that your funds are legitimate. To prove your identity, you will be required to provide your passport copy. If you live in a foreign country, this passport copy will need to be certified.
Once your brokerage account is open, you’ll need to initiate a deposit or funds transfer. The funds transfer process can take anywhere from a few days to a week depending on the country in which you invest. Once that is complete, you can begin investing.
When it comes to developing countries and emerging markets, In some countries like Vietnam, the whole process can take up to several weeks. The administrative burden is still important in most developing countries and it makes everything harder.