Last week, I saw this on the cover of The Economist. Covers like this are very often good contrarian indicators.
It is Wall Street’s worst kept secret that they are using the media to manipulate markets to enter and exit their stock positions. Our job is to sieve through the news and spot the bullshit. Jesse Stine, author of the book “Insider Buy Superstocks” also called out Goldman Sachs as the “best in the business” of market manipulation.
I agree with this point as I believe that every news outlet has their own agenda and we cannot take everything at face value.
One of the investors that I follow Michael Burry, also doubled down on China Tech stocks.
China Tech Related ETF
To ride on this wave, I decided to invest in an Exchange-Traded Fund (ETF) that provides investors with exposure to the technology sector in Hong Kong. This is because I prefer to invest in a basket of shares instead of homing into a few. (Partly that is also because I am not familiar with these stocks.) There are two similar ETFs that provide exposure to the technology sector of China:
- Lion-OCBC Sec HSTECH (Singapore):
- Ticker Symbol: HST SP
- Exchange: Singapore Exchange
- Underlying Index: Hang Seng Tech Index
- Geographic Focus: Hong Kong technology sector
- Key Features: Diversified exposure to large-cap and mid-cap technology companies in Hong Kong, passive investment strategy, cost-effective, listed in Singapore.
- iShares Hang Seng TECH ETF (Hong Kong):
- Ticker Symbol: 3035 HK
- Exchange: Hong Kong Stock Exchange
- Underlying Index: Hang Seng TECH Index
- Geographic Focus: Hong Kong technology sector
- Key Features: Exposure to large-cap and mid-cap technology companies in Hong Kong, passive investment strategy, listed in Hong Kong.
Comparison
Exchange Listing: Lion-OCBC Sec HSTECH is listed on the Singapore Exchange, while iShares Hang Seng TECH ETF is listed on the Hong Kong Stock Exchange. The choice of exchange can be important for investors in terms of accessibility, trading hours, and transaction costs.
Underlying Index: Both ETFs track the same underlying index, the Hang Seng TECH Index, which consists of leading technology companies in Hong Kong. This ensures that investors in either ETF gain exposure to a similar basket of companies within the sector.
Geographic Focus: Both ETFs focus on the technology sector in Hong Kong. This allows investors to target a specific market segment known for its technological innovation and growth potential.
Diversification: Both ETFs offer diversified exposure to a mix of large-cap and mid-cap technology companies. Diversification helps to spread risk across multiple companies and potentially reduce volatility.
Fund Provider: Lion-OCBC Sec HSTECH is managed by Lion Global Investors and OCBC Securities, while iShares Hang Seng TECH ETF is managed by BlackRock. The reputation, experience, and track record of the fund provider can be important factors to consider when choosing an ETF.
Trading Currency: Lion-OCBC Sec HSTECH is traded in SGD and USD, while iShares Hang Seng TECH ETF is traded in (HKD). The trading currency can impact currency conversion costs for investors depending on their base currency.
Which to choose?
Both Lion-OCBC Sec HSTECH and iShares Hang Seng TECH ETF offer exposure to the technology sector in Hong Kong and track the same underlying index. Both ETFs provide investors with diversification across large-cap and mid-cap technology companies in this market.
Considering the Singapore-based perspective, Lion-OCBC Sec HSTECH has the advantage of being listed on the Singapore Exchange. This can be beneficial for investors based in Singapore who prefer to transact in Singapore dollars (SGD) and have easier access to the ETF through the local exchange. It may also provide more convenience in terms of trading hours and potentially lower transaction costs for Singapore-based investors.
On the other hand, iShares Hang Seng TECH ETF is listed on the Hong Kong Stock Exchange, which may be preferable for investors who have direct access to that market or who prefer to transact in Hong Kong dollars (HKD).
Both ETFs are managed by reputable fund providers, and the choice between them could come down to factors such as expense ratios, liquidity, and trading volume. Ishares’s expense ration of 0.25% is lower than Lion’s 0.45%. But I would prefer to invest in Lion as it is listed in SGX. Investors may want to compare these aspects and consider their own preferences when making a decision.
Is it time to invest in China?
The China reopening narrative has been around for some time but recent data coming from China does not look rosy.
https://edition.cnn.com/2023/04/30/economy/china-pmi-april-intl-hnk/index.html
The recent market correction and price decline of Lion-OCBC Sec HSTECH may present an attractive entry point for investors seeking exposure to the Hong Kong tech sector. This correction could be viewed as a temporary setback, providing an opportunity to buy into the ETF at a more favorable valuation. Investors who believe in the long-term growth prospects of the Hong Kong tech sector may find this dip in price an advantageous entry opportunity.
Investors in Lion-OCBC Sec HSTECH have had the opportunity to benefit from the growth potential of leading Hong Kong tech companies. By tracking the Hang Seng Tech Index, the ETF provides a diversified portfolio of tech giants and emerging players in Hong Kong’s dynamic market.
Strategy
Investing in Lion-OCBC Sec HSTECH employs a passive investment strategy, aiming to replicate the performance of the underlying index rather than actively selecting individual stocks. The ETF typically holds a portfolio of securities that closely mirrors the composition and weightings of the Hang Seng TECH Index.This suits me well as I can have more time on my hands to do my research while dipping my toes into the pool at the same time.
It’s important to note that past performance is not indicative of future results, and investing in any ETF carries inherent risks. Therefore, thorough research, careful analysis of the underlying holdings, and consideration of one’s investment goals and risk tolerance are essential when evaluating the suitability of Lion-OCBC Sec HSTECH or any other investment opportunity.