The COVID-19 pandemic has significantly disrupted both working practices and life in general and many of us have been adjusting to this new working world and lifestyle. We have gotten used to working from home for extended periods of time and are now relying on digital ways to complete our daily errands and tasks.
Traditional businesses were impacted as well and many companies took this opportunity to pivot their operations and automate processes as strategies were redefined to meet the increasing need for a digital transformation.
Many of the technology companies that we were familiar with come from the United States, particularly Silicon Valley in the past twenty years. However, in recent years, the Chinese have also increased their technological research and absorption and have strengthened their digital presence globally.
How Hang Seng TECH Index Companies Performed During COVID-19
Alibaba, Tencent, Xiaomi, Lenovo, and JD.com are some of the Chinese technology companies that have become very popular and are tracked by the Hang Seng TECH Index.
The Hang Seng Tech Index which represents the 30 largest technology companies by market capitalization listed on the Hong Kong Stock Exchange was launched on the 27th July 2020.
Since its inception till 25 November 2020, the Hang Seng TECH Index has gained nearly 20%, outperforming Hang Seng Index, NASDAQ, and Straits Times Index during the same period.
How Investors Can Invest In Tech Companies Listed on the HKEX
For those who are attracted by the growth in the technology sector, how can they get a piece of the pie?
An investor could attempt to build their own portfolio of technology companies by purchasing multiple stocks, for instance, Alibaba Group Holding Ltd (HKG: 9988), JD.com Inc (HKG: 9618), and Meituan Dianping (HKG: 3690).
However, such an approach will incur multiple fees.
In addition, if an investor does not diversify across the sectors, there may also be a risk of over-concentration on a particular stock or counter which is risky for the portfolio.
Hence, some investors will choose to invest in ETFs instead which gives you a basket of various companies, and thus by buying ETFs, one would already be diversifying their portfolio right away.
However, investors still need to take note that if the ETFs are comprised of companies that are in similar businesses, then they may all be susceptible to the same economic market or political occurrences that will affect that sector or industry in which case then the ETF’s performance may be negatively affected.
Accessing the Hang SengTECH Index Locally
Local investors who are interested in the Hang Seng TECH Index would be glad to know that the Lion Global Investors (LGI) and OCBC Securities have launched the new Lion-OCBC Securities Hang Seng TECH ETF that will be listed on the Singapore Exchange and can be traded using cash and/or SRS.
The ETF will similarly comprise the 30 largest technology companies listed on the Hong Kong Exchange, including names that we are familiar with such as Alibaba Group Holdings, Meituan Dianping, Kingdee International, Netease Inc., and many more.
It will be regularly managed through quarterly rebalancing with a maximum cap of 8% allocation for each company during rebalancing and its fast entry mechanism will capture any new high profile entrants as IPOs will be added right after the close of their first trading day if their market capitalization ranks among the Top 10 of the existing constituents.
The ETF is also classified as an Excluded Investment Product (EIP), which means you do not need to pass any Customer Account Review (CAR) declaration to trade it. Furthermore, with a small trading board lot size of just 10 units, this makes the ETF relatively easy to start trading.
You can start buying (and selling) the ETF from 10 December 2020 onwards. It is available in both SGD (under the stock code “HST”) and USD (under the stock code “HSS”).
The Lion-OCBC Securities Hang Seng TECH ETF is one that will be high on the agenda of many Singaporean investors as the technology sector heats up with the accelerated adoption of technological changes post-COVID.
To find out more about the Lion-OCBC Securities Hang Seng TECH ETF, please visit OCBC Securities Website.
Disclaimer: This is a sponsored
collaboration article with OCBC Securities.
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1 thought on “Investing in the Lion-OCBC Securities Hang Seng TECH ETF”
any comments on your view of Lion-OCBC Securities Hang Seng TECH ETF vs iShares Hang Seng TECH ETF, given that they are actually quite similar.. (I had bought quite a bit of the iShare version and is considering if it is worth switching over to the Lion-OCBC version instead..)
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