Hehe, Not quite as simple as that.... To arbitrage the currency differential you would have to sell (or promise to sell) the Oz shares at the same time as you buy (or promise to buy) the UK shares – otherwise you are exposed to the actual share price movement as well (which could very easily eclipse any currency arbitrage).
Also the long-term share price correspondence may not be reflected by direct currency equivalency (for example stocks with high dividend franking rates may get more credit for that on the OZ market than on an overseas exchange) so you are actually looking to arbitrage variation away from the long-term correlation of the two shares. This is not to negate the validity of an arbitrage strategy – but it is a bit more complicated than a simple currency comparison – and there tends to be a certain amount of “art” to combine with the “science” - otherwise the programmers would just all sit back and let their computers trade them into billionaires – rather than selling their software ;o) Fascinating subject though – how computerised trading has altered market dynamics and, some would say, increased market volatility. Cheers Neil -- Neil R. Houghton Albany, Western Australia Tel: +61 8 9841 6063 Email: n...@possumology.com on 17/10/10 10:31 AM, David Noel at lis...@aoi.com.au wrote: > -- Yes, the Pommy pound is sinking slowly in the West, so things bought from > the UK (especially with the high A$) can work out much cheaper. > > -- The whole question of varying exchange rates is quite interesting. Share > traders have a well-established practice (called arbitrage) based on this, and > computer programs to do it automatically. If a mining stock has an Australian > stock exchange quote of $50.000, but in the UK it is the equivalent of > $49.998, buy up (or promise to buy) 100,000 shares from the UK. Wait 10 > minutes, the UK price goes to $50.003, sell the shares back. > > Cheers -- > > David Noel > Oct 17 > > ===== > > On 16 October 2010 13:27, Neil Houghton <n...@possumology.com> wrote: >> >> We obviously just need one worldwide currency unit - maybe a GGE - gold gram >> equivalent ;o) >> >> Cross-border buying is now pretty easy - and can be very confusing re >> currency equivalents - for example: >> >> I just bought Toast 10: >> >> On the Oz website it was $179 AUD for the full version or $149AUD for an >> upgrade - but I just had an email from Roxio offering the full version (not >> upgrade) for half price ie $89 AUD. >> >> Out of interest I compared the (half) price in the Roxio different country >> stores and translated using the (at the time) $1AUD sells conversion rate >> from <http://markets.smh.com.au/apps/mkt/forex.ac>: >> >> >> US$69.99 converted @ .9904 to $70.67AUD >> €49.99 euro converted @ .7061 to $$70.80AUD >> GBP £34.99 converted @ .6190 to $56.52AUD >> >> So I decided that, for once, the pommies were offering exceptional value! >> >> I decided to see if they would let me buy from the UK store - half expecting >> that when I put in my Australian address it would take me back to the OZ >> store - but, no, the UK store happily let me put in my Australian address >> and buy toast for GBP £34.99 - and I was happy with my bargain! >> >> Obviously the exchange rate (& hence the extent of my "bargain") changes by >> the minute - but we are not talking about marginal differences here! >> >> Anyway Toast 10 now installed & registered & I'm happy :o) >> >> >> >> Cheers >> >> >> >> Neil >> -- >> Neil R. Houghton >> Albany, Western Australia >> Tel: +61 8 9841 6063 >> Email: n...@possumology.com >> >> >> >> on 16/10/10 12:06 PM, Roger Kortas at rkor...@iinet.net.au wrote: >> >>> > >>> > you have to remember Apple set their prices in advance based upon many >>> things, >>> > so if the AUD goes down our price does not go up but of course if the AUD >>> goes >>> > up well the price wont go down until the next review. >>> > >>> > Just my thoughts >>> > >>> > Roger >>> > >>> > On 16/10/2010, at 12:00 PM, Brian Risbey wrote: >>> > >>>> >> >>>> >> Yes and how much for an Apple TV? >>>> >> >>>> >> Brian >>>> >> Sent from my iPhone >>>> >> >>>> >> On 16/10/2010, at 10:44, Paul Weaver <pwea...@westnet.com.au> wrote: >>>> >> >>>>> >>> >>>>> >>> I see that the Australian dollar is equal to a US dollar today, but a >>>>> basic >>>>> >>> iPad from Apple in Australia still costs A$629 versus US$499 in >>>>> America. :( >> >> -- The WA Macintosh User Group Mailing List -- Archives - <http://www.wamug.org.au/mailinglist/archives.shtml> Guidelines - <http://www.wamug.org.au/mailinglist/guidelines.shtml> Unsubscribe - <mailto:wamug-unsubscr...@wamug.org.au>
