Underlying Index
Hang Seng Tech Index represents the 30 largest technology companies listed in Hong Kong that have high business exposure to technology themes and pass the index’s screening criteria.
For more details on the index, e.g. factsheet, index methodology, performance, constituents, daily reports, etc., visit the Hang Seng Tech Indexes website.
Main Features
- Invest in the largest tech companies in China
- Diversified across 30 companies
- IPO Fast Entry – Qualified IPOs included in the index shortly after listing
- For Singapore-based investors:
- Excluded Investment Product (EIP) – investors can invest in this ETF without having to go through Customer Account Review (CAR) before being allowed to trade
- Invest with less than S$20
- Trade in S$ or US$
- Invest using cash and/or Supplementary Retirement Scheme (SRS)
- Listed on SGX
Top 10 Holdings (as of April 2021)
- Alibaba (9988) – E-commerce (retail), cloud computing, digital media & entertainment
- Xiaomi (1810) – Consumer electronics (smartphones, IoT)
- Meituan (3690) – E-commerce (food delivery, hotel & travel, new initiatives)
- Tencent (0700) – Social media, online games, fintech and business services, online advertising
- Kuaishou (1024) – Short video social media platform, live streaming, online marketing
- Sunny Optical (2382) – Optical products and scientific instruments for electronics
- JD Health (6618) – Online healthcare platform, pharmaceutical and healthcare products, health management and intelligent healthcare solutions
- JD.com (9618) – E-commerce (retail)
- SMIC (0981) – Semiconductor foundry
- Ali Health (0241) – Pharmaceutical e-commerce, intelligent medicine, product tracking platform
Pros
- Smaller investment amount required
- Since the minimum trading board lot size for HST is only 10 shares, one can invest for as little as S$14 (based on HST price S$1.362/share as of 14th Dec 2020). Of course, this won’t make sense if you include fees and/or brokerage commissions but one can decide how much to invest in increments of only 10 shares.
- In contrast, HK-listed counter Tencent for example has minimum trading board lot size of 100 shares, amounting to around HKD57,100 or around S$9,800 (based on 0700.HK price HKD571/share as of 14th Dec 2020). For a small investor, this may be prohibitive expensive.
- Passive investment – no need for investors to pick stocks and rebalance holdings, note that ETF itself is more active than the usual benchmark index ETF which are generally market cap-weighted (if you’re curious you can look into the index methodology in their pitchbook on OCBC Securities website, link below)
- Participate in growth of Chinese tech companies, e.g. Alibaba, Tencent, Meituan, Xiaomi
- IPO fast entry feature – China also has some of the world’s most valuable unicorns, e.g. Ant Financial, ByteDance, Didi Chuxing
- Denominated in SGD and USD – no need for investors to incur additional forex costs
- US-China trade tensions – US-listed Chinese companies increasingly seeking secondary listing in HK
Cons
- Not much historical performance data on underlying index, Hang Seng Tech Index launched only in July 2020 – Hang Seng Indexes website does provide hypothetical back-tested performance though
- No information on tracking difference/error yet
- Expense ratio not cheap (capped at 0.68% per annum for first 2 years from Fund inception; management fee at 0.45% per annum)
Risks
- Increased scrutiny from Chinese regulators – China’s antitrust crackdown on Chinese tech giants
- China exerting more control over HK – might trigger more unrest
- Rise of Shanghai Exchange competing with HK Exchange for listings
How To Invest
- Lion-OCBC Hang Seng Tech ETF (SGX:HST, HSS)
- iShares Hang Seng Tech ETF (HKEX:3067,9067)
- CSOP Hang Seng Tech ETF (HKEX:3033)
Useful Links
- Hang Seng Indexes (hsi.com.hk) – Information about Hang Seng TECH Index, including Factsheet and Index Methodology
- index (lionglobalinvestors.com) – Lion Global Investors website
- Lion-OCBC Securities Hang Seng TECH ETF | OCBC Securities (iocbc.com) – OCBC Securities website
- Hang Seng Tech Index – Tracking The Rise Of Tech Stocks In The East (drwealth.com) – Article by Dr. Wealth
- 5 Most Influential Companies Of the New Lion-OCBC Securities Hang Seng TECH ETF – The Smart Investor – Good introduction to the top 5 holdings of HST
- Hang Seng Tech ETF – Is It Worth Investing? – SGMoneyMatters – Article by SGMoneyMatters
- CSOP (csopasset.com) – CSOP website
- iShares Hang Seng TECH ETF | 3067 (blackrock.com) – iShares Hang Seng Tech ETF website
Disclaimer: This is not financial advice. I am not professional financial advisor nor do I work in the finance industry. Anything I write here is purely my personal opinion. Please do your own research and due diligence before investing into anything. All investments come with associated risks. Best to consult a financial advisor if you’re still unsure.
Disclosure: I’m long HST.