Since May 2023, Singaporean investors have been able to trade an investment product known as Singapore Depository Receipts (SDRs).
These receipts allow investors to gain exposure to companies listed overseas without opening foreign brokerage accounts. Over the past two years, SDRs have gained more attention as Singapore builds a more accessible and internationally diversified investment ecosystem.
In this guide, we will explain how they work, the benefits and risks of investing in them, and the key points to keep in mind before buying.
What are Singapore Depository Receipts?
According to the Singapore Exchange, Singapore Depository Receipts (SDR) represents a beneficial interest in an underlying security listed on an overseas exchange. Each SDR is issued for trading on the Singapore Exchange Securities Trading Limited (SGX-ST) by an intermediary, referred to as an SDR issuer, without a formal agreement with the foreign company.
In other words, SDRs are not actual shares. The SDR issuer buys the underlying shares and deposits them with a custodian in the company’s home country. The SDR issuer also facilitates any conversions between the SDR and the original shares.
This structure makes it easier for Singapore-based investors to buy into overseas companies without setting up foreign brokerage accounts or handling tax and reporting requirements themselves. At present, all SDRs on SGX-ST are issued by Phillip Securities.
Depository receipts are not new. In the United States, for example, investors trade American Depositary Receipts (ADRs). The first ADR dates back to 1927, when J.P. Morgan created one for the British retailer Selfridges.
Benefits of SDRs
For Singaporeans, investing abroad can seem complicated and expensive.
SDRs offer a simpler route. You can invest in large international companies such as Tencent or Alibaba through your existing brokerage account. There is no need to manage foreign custody arrangements or pay extra platform charges that often apply when holding overseas shares.
The initial investment outlay is also much lower compared to buying shares directly from markets such as Hong Kong or Thailand. This is because each SDR corresponds to a set ratio of the underlying shares.
For example, Tencent shares on the Hong Kong Exchange must be bought in lots of 100, and BYD shares in lots of 500. Buying these directly requires a large sum upfront. In contrast, the SDR structure allows smaller investments by setting ratios that reduce the minimum amount required.
Take BYD as an example. With its trading price at HK$112.70 (S$18.50) on 5 August, the minimum board lot of 500 shares would cost about S$9,250. The BYD SDR, however, requires only about S$185 for a minimum lot, since it trades in units of 100 with a 10:1 ratio.
SDRs are also traded in Singapore Dollars (SGD). You avoid currency conversions when buying and selling, and dividends are paid in SGD after withholding tax is handled on your behalf. Trading takes place during SGX market hours, adding convenience.
By using SDRs, investors can diversify into larger economies such as China while reducing reliance on local companies.
Read more: Investment Portfolio Basics: What is it, and How to Build One?
Risks to consider
Despite the advantages, SDRs carry risks.
Geopolitical risk is a key concern. Many of the current SDRs are tied to Chinese and Thai companies. Issues such as delistings, regulatory crackdowns, or political tensions can affect the value of these stocks.
Although SDRs are traded in SGD, the underlying securities are priced in their home currencies or in US dollars. Exchange rate movements can therefore affect your returns. A weaker foreign currency against the SGD will reduce profits.
Liquidity is another factor. As SDRs are still relatively new, some have low trading volumes, which can make it harder to buy or sell without facing wide bid-ask spreads. This is especially challenging for short-term traders.
As of August 2025, there are only 15 SDRs available on SGX-ST, consisting of eight Hong Kong-listed and seven Thai-listed blue-chip companies. The range is still limited, and investors may need to wait for a broader lineup before achieving greater diversification.
Alternatives to SDRs
While SDRs provide a convenient way to invest in foreign companies through SGX, they are not the only option available to Singapore investors who want global exposure. Depending on your investment goals and risk appetite, you may consider the following alternatives:
1. Exchange-Traded Funds (ETFs) listed on SGX
ETFs allow you to invest in a basket of international stocks through a single product. They are liquid, relatively low-cost, and easy to access through local brokerages. Examples include:
- Lion-OCBC Hang Seng Tech ETF: Tracks 30 leading Hong Kong technology companies.
- SPDR S&P 500 ETF: Tracks 500 large US-listed companies.
- CSOP FTSE China A50 ETF: Tracks 50 of the largest Chinese A-share companies.
- Nikko AM Asia Ex-Japan REIT ETF: Tracks Asian REITs across multiple sectors.
- iEdge-UOB APAC Green REIT ETF: Tracks Asia-Pacific REITs focused on sustainable properties.
These ETFs give you diversified access to foreign markets without needing to manage individual shares.
2. Online brokerages
Platforms such as Endowus, Syfe, and Tiger Brokers allow Singapore investors to directly purchase overseas stocks and ETFs. These platforms often provide competitive fees and access to multiple global markets. However, investors need to handle foreign currency conversions and be aware of overseas tax rules.
3. Robo-advisors
For those who prefer a hands-off approach, robo-advisors offer curated global portfolios with diversified asset allocations. These portfolios often include US equities, emerging markets, and bonds, providing balanced exposure with automated rebalancing.
4. Unit trusts and mutual funds
Local banks and financial institutions also offer unit trusts or mutual funds that invest in global markets. These may appeal to investors who prefer professional fund management, though fees are usually higher compared to ETFs or robo-advisors.
Read more: What to Look Out for When Investing in ETFs?
In summary
Although SDR trading volumes remain modest, interest is growing. Daily turnover reached S$5.4 million in May 2025, and both the Monetary Authority of Singapore (MAS) and SGX are encouraging further development of the market.
SDRs provide a convenient way for Singaporean investors to access foreign companies without dealing with currency conversions, tax processes, or foreign accounts. However, they are not without risks. Before investing, you should understand the underlying company and the market it operates in, and be prepared for issues such as limited liquidity or currency fluctuations.
Used wisely, SDRs can be one part of a broader strategy to build a well-diversified, global portfolio.
Read more: A Beginner’s Guide to Investing with Robo Advisors in Singapore
