Cross Country P2P Investing Guide: Factors to Consider (Part 1!)


  • Community Manager

    Greetings folks!

    We’re seeing a growth in interest and attention towards cross-country P2P investing within the community 🎉


    Why invest in P2P platforms overseas?

    P2P investors typically venture into platforms overseas to benefit from the greater quantity and spread of opportunities. This is especially so, if their aim is to expand their P2P portfolio more quickly, and to diversify not just across platforms, industries, but also across currencies and countries for the geographical spreading of risks.

    How then do they best leverage on cross-country P2P investing to offer, and maximise returns in the long run?


    Factors to consider when venturing into overseas P2P platforms within the region

    Regardless of where you hail from, these are the factors we’ve gathered, from conversations within the community, which you can consider when venturing into overseas P2P platforms within the region (non-exhaustive):

     

    1: CHOOSING A SUITABLE TARGET PLATFORM

    1.1 Do I qualify as an investor with the platforms?

    1.2 Market Regulations

    • How are regulations like in the target country?
    • To what extent will my interests be protected as an investor?

    1.3 Relevant Macro- & Micro-economic Factors

    • Is the economy generally stable?
    • How’s the SME climate like in the target country, is it growing?
    • How’s the P2P industry like?
    • Are the capital controls in that country tight / susceptible to tightening?
    • Will I then be able to freely repatriate funds back to my domestic account?

    1.4 Experiences of Other Investors

    • Are fellow investors also investing with these platforms? How’s their experience been so far? Can I reach out to them for advice on specific issues?

    Yes, check out:

    (Feel free to bring up your questions on CrowdFund Talks by starting a new topic!)

     

    Which 5 - 10 questions / concerns
    are the most important to you?

    The list goes on, but we're curious to find out which ones matter the most to you. We can then grow topic threads centered around the more crucial factors in the eyes of the community.
     

    Disagree with any of the points above?
    Raise it and let's discuss!

    For those of us with more FAQs to add on to this list, let’s all crowd-pool our questions and concerns, and make cross-country investing less of a black box for all of us!

     

    Itching to share your opinion / experiences? Take the lead and write a new topic on any of the issues raised!

    Contribute your perspectives to any of the above in a new topic post (!) within the category Investing in Debt Crowdfunding - P2P Financing. Spread your knowledge!

    CrowdFund Talks Awards is coming up soon - prizes are up for grabs, so don’t miss the chance to be a star contributor ;)

     

    Stay tuned for Part 2, on

    2: FACTORS DIRECTLY IMPACTING RETURNS!

     

    Disclaimer: Nothing in this article should be construed as, constitute, or form a recommendation, financial advice, or an offer from CrowdFund Talks. We are not to be held accountable for any losses on any investments made by readers. The content and materials made available are for informational purposes only.


  • Emergent

    Stable currency exchange vis a vis my home country (SGD).

    I’m quite quantitative in my approach to P2P. Rewards must be commensurate to risk taken. Many of you know my formula of comparing effective rate vs default rate. If I were to invest in other counties I will also add in the currency volatility. I do not take directional bets. And my view is for the long run. So for MYR and IDR, I don’t think it’s worth it. I rather keep my money in SGD which may earn more because there’s no FX risk.

    But if it were USD and EUR, maybe the exchange rates are stable enough to be worth considering.


  • Contributor

    @jomni ineresting. may I know why you say long term MYR / IDR is not worth it?


  • Community Manager

    [Update! Useful information:]

    For greater clarity, you may find existing posts for "1.1 - Do I qualify as an investor with the platforms?" here:

    1.1.1 Which platforms in Singapore are open to foreign investors?

    1.1.2 Which platforms in Malaysia are open to foreign investors? (Work in progress—stay tuned!)

    1.1.3 Which platforms in Indonesia are open to foreign investors?

    1.1.4 Which platforms globally are open to foreign investors?

    Cheers!


  • Emergent

    @jonhan said in Cross Country P2P Investing Compilation Guide: Factors to Consider (Part 1!):

    @jomni ineresting. may I know why you say long term MYR / IDR is not worth it?

    Just the uncertainty on the valuation when you cash out.



  • Hi. I am interested to invest on Malaysia as a Singaporean in the short term. How do I do so? What other things or advice I have to take note?


  • Community Manager

    @alex-chua-cheng-en Hey there Alex! We've just done up a post on 1.1.2: Malaysian P2P platforms which are open to foreign investors. You can check it out here!

    Within the coming week, you can expect to also see an overview of factors affecting returns, which is the second part of this series!

    Cheers ~


  • Contributor

    Anyone here invested in P2P Vietnam or Thailand?


  • Funding Societies

    @ktinvest I believe a few people have looked into P2P in vietnam before. But it's kinda tricky, as its hard to move money out of the country. if you figure out a way, lets us know as many of us are interested to know more about it! :)



  • Any suggestions to mitigate FX exchange risk when doing cross country P2P investing? Singapore dollars is forever rising and is eating into returns. Did anyone try trading FX to hedge against the risk and how to go about doing it? Is it worthwhile?


  • Contributor

    @bigboiboi said in Cross Country P2P Investing Guide: Factors to Consider (Part 1!):

    Any suggestions to mitigate FX exchange risk when doing cross country P2P investing? Singapore dollars is forever rising and is eating into returns. Did anyone try trading FX to hedge against the risk and how to go about doing it? Is it worthwhile?

    This topic has been discussed a lot of times, but no clear conclusion.
    @kaeley-wn please point us to someone who knows more about this! thank you



  • @jonhan Ok I found out that I can sell Euro dollars and buy SGD in the spot market using Interactive Brokers (I am already using Interactive Brokers to invest in overseas stocks). So what I did was to sell approx the amount of Euro that I have invested in the overseas P2P platform using Interactive Brokers. There is a margin interest of 1.5% at the moment I think (since I do not hold any Euro so I would need to borrow Euro to sell them). Since the 1.5% is lower than the approx 1.9+% I can get from Singapore Savings Bond (SSB), I do not really lost out. So I would just invest the SGD I got in SSB. The risk is the 1.5% is not fixed and may rise.



  • @bigboiboi

    So what I did was to sell approx the amount of Euro that I have invested in the overseas P2P platform using Interactive Brokers. There is a margin interest of 1.5% at the moment I think (since I do not hold any Euro so I would need to borrow Euro to sell them).

    Not a financial savvy person, but interested in trying cross country p2p out. Do you mind explaining how the above helps with mitigating FX exchange risk when doing so? Thanks!



  • @chekmeng Simply speaking, you have fixed the exchange rate at the rate you sold the Euro for. Any amount you received from the overseas P2P is in Euro, and would be used to repay the Euro that you borrowed earlier.

    No matter how much the exchange rate fluctuate after you sold the Euro does not matter, since your investment in P2P in Euro would be used to repay the Euro you borrowed.



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