Investors seeking vulnerability to the Hong Kong banal marketplace mightiness see exchange-traded funds (ETFs). Hong Kong has agelong thrived arsenic a planetary fiscal halfway and unfastened capitalist economy, and it mostly has continued to bash truthful since it became a semi-autonomous portion of China successful 1997. Beijing initially allowed Hong Kong to support its Western-style governmental strategy nether the cardinal government's "one country, 2 systems" approach. But now, governmental unrest and Beijing's continued tightening of power implicit antiauthoritarian freedoms successful Hong Kong endanger the erstwhile British colony's governmental and economical autonomy.
One caller motion of diminishing freedoms occurred successful April 2021 erstwhile Hong Kong's Legislative Council passed a instrumentality that makes it importantly easier for the authorities to rapidly artifact Hong Kongers from leaving, expanding the scope of past year's nationalist information law. Developments similar this are raising questions implicit Hong Kong's aboriginal relation arsenic a planetary fiscal hub. However, for present astatine least, Hong Kong remains unfastened for concern and capitalist capital, with ETFs offering possibly the champion mode to summation diversified vulnerability to this starring fiscal halfway successful the planetary economy.
- Hong Kong equities underperformed the broader U.S. banal marketplace implicit the past year.
- There are 2 Hong Kong ETFs that commercialized successful the U.S.: FLHK and EWH
- The apical holding for each of these ETFs is AIA Group Ltd.
There are conscionable 2 chiseled Hong Kong ETFs that commercialized successful the U.S., excluding inverse and leveraged ETFs. Hong Kong equities, arsenic measured by the MSCI Hong Kong Index, person underperformed the U.S. equity marketplace implicit the past 12 months, with a full instrumentality of 27.6% compared to the S&P 500's full instrumentality of 36.3%, arsenic of Aug. 3, 2021. The best-performing Hong Kong ETF, based connected show implicit the past year, is the Franklin FTSE Hong Kong ETF (FLHK). We look astatine some Hong Kong ETFs below. All numbers are arsenic of Aug. 4, 2021.
ETFs with precise debased assets nether absorption (AUM), little than $50 million, usually person little liquidity than larger ETFs. This tin effect successful higher trading costs, which tin negate immoderate of your concern gains oregon summation your losses.
Franklin FTSE Hong Kong ETF (FLHK)
- Performance implicit One-Year: 24.8%
- Expense Ratio: 0.09%
- Annual Dividend Yield: 2.96%
- Three-Month Average Daily Volume: 1,080
- Assets Under Management: $16.9 million
- Inception Date: Nov. 2, 2017
- Issuer: Franklin Templeton
FLHK tracks the FTSE Hong Kong Capped Index, a market-cap-weighted scale representing the show of large- and mid-cap Hong Kong-listed stocks. The ETF follows a blended strategy, providing vulnerability to a premix of maturation and value stocks astatine a comparatively debased cost. The bulk of its holdings are companies domiciled wrong Hong Kong. That said, China-based companies relationship for conscionable implicit a tenth of the fund's full assets, portion there's besides a precise tiny information of Macao, Italy, Luxembourg, Singapore, United States, Cambodia, Indonesia, and Taiwan-based stocks. The fund's largest vulnerability is to the fiscal sector, followed by existent property and industrials.
FLHK's apical 3 holdings are AIA Group Ltd. (1299:HKG), a supplier of security and fiscal services; Hong Kong Exchanges & Clearing Ltd. (388:HKG), an proprietor and relation of banal and futures markets; and Techtronic Industries Co. Ltd. (669:HKG), a multinational shaper of powerfulness tools, manus tools, outdoor equipment, and more.
iShares MSCI Hong Kong ETF (EWH)
- Performance implicit One-Year: 23.1%
- Expense Ratio: 0.51%
- Annual Dividend Yield: 2.29%
- Three-Month Average Daily Volume: 4,615,777
- Assets Under Management: $1.1 billion
- Inception Date: March 12, 1996
- Issuer: BlackRock Financial Management
EWH is overmuch larger and much liquid than FLHK, but besides much expensive. This ETF tracks the MSCI Hong Kong 25/50 Index, an scale designed to gauge the show of the large- and mid-cap segments of the Hong Kong equity market. It follows a blended strategy, investing successful some worth and growth stocks, and each of the fund's holdings are fundamentally domiciled successful Hong Kong.
Real property companies are fixed the largest allocation successful the portfolio, followed by security companies and diversified financials. The fund's apical 3 holdings are AIA Group Ltd.; Hong Kong Exchanges & Clearing Ltd.; and Techtronic Industries Co. Ltd.
The comments, opinions, and analyses expressed herein are for informational purposes lone and should not beryllium considered idiosyncratic concern proposal oregon recommendations to put successful immoderate information oregon to follow immoderate concern strategy. While we judge the accusation provided herein is reliable, we bash not warrant its accuracy oregon completeness. The views and strategies described successful our contented whitethorn not beryllium suitable for each investors. Because marketplace and economical conditions are taxable to accelerated change, each comments, opinions, and analyses contained wrong our contented are rendered arsenic of the day of the posting and whitethorn alteration without notice. The worldly is not intended arsenic a implicit investigation of each worldly information regarding immoderate country, region, market, industry, investment, oregon strategy.