Hong Kong stocks may already meet the conditions for a left-side allocation. The HKEX Tech 30 ETF ICBC (159636) helps enable one-click allocation to high-quality leading Hong Kong tech stocks.

By Daily Economic News Editor: Feng Ye

Since February this year, the phase-appropriate pullback in the Hang Seng Index and the Hang Seng Tech Index within Hong Kong stocks has drawn market attention. Amid fluctuations in market sentiment, the profound reshaping of the global macro landscape is reworking the direction of capital flows, which may bring fresh incremental logic to Hong Kong stocks that are trading at low valuation levels.

Recently, global capital allocation has shown marginal changes, and Hong Kong stocks have once again entered overseas institutions’ line of sight. On the one hand, some capital has started to reassess its allocation to Hong Kong-listed assets, and even considered increasing its layout in Hong Kong through various forms. On the other hand, against the backdrop of geopolitical conflicts and high oil prices, the reallocation demand from Middle Eastern sovereign wealth and high-net-worth capital has increased. As the core hosting location for “low valuation + China asset exposure,” Hong Kong stocks have strong appeal.

Some analysts believe that the upward trend in Hong Kong stocks may not be over yet, and that the first “buying for the year” window worth taking actively may be right now. From a long-term perspective, this round of adjustment has only shaken market valuations and short-term risk appetite, without undermining the core mainline of earnings recovery for Hong Kong stocks. For institutional investors, they may already have conditions for a left-side layout. If external shocks do not further escalate afterward, Hong Kong stocks will most likely move out of the adjustment range, return to a volatile-and-rising channel, and the subsequent performance of this round of trading may also switch from valuation-driven effects in the early period to earnings-driven effects, with the main focus on structurally high-quality opportunities.

In terms of allocation, internet and AI platforms are the first main theme, highly liquid tech leaders are the second main theme, and innovative drugs and new consumption are the two more flexible areas of sector outlook. However, subsequent excess returns are expected to come more from core companies with clear industry-chain positioning, explicit progress in commercialization, and earnings resilience beginning to unleash, rather than broad-based “all boats rise” gains at the sector level.

For ordinary investors, directly investing in multiple Hong Kong-listed tech stocks not only has a high threshold, but also is relatively complex operationally. By contrast, through the Hang Seng Stock Connect Tech 30 ETF Industrial and Commercial Bank of China (159636) and its over-the-counter feeder fund (A: 019933; C: 019934), investors can build a portfolio of multiple high-quality Hong Kong-listed tech companies with a single click.

According to materials, the Hang Seng Stock Connect Tech 30 ETF Industrial and Commercial Bank of China (159636) tracks the Guo Zheng Hang Seng Stock Connect Tech Index (short name: Hang Seng Stock Connect Tech, code: 987008). This index selects securities of 30 technology leader listed companies with relatively large market caps, higher R&D investment, and better revenue growth as index constituents. The top 10 constituent stocks together account for more than 75%, covering cutting-edge technology fields such as AI, intelligent vehicles, and innovative drugs, to reflect the overall performance of listed companies in the Hang Seng Stock Connect Tech sector.

It is worth noting that the valuation of the Hang Seng Stock Connect Tech Index is in one of the lowest areas in history. According to Wind, as of March 30, the index’s price-to-earnings (PE) (TTM) was 26.07 times, placing it at the 39.77th percentile over the past decade. Although due to recent geopolitical volatility, disturbing factors have also increased and Hong Kong stock valuations may face further pressure, this does not affect the long-term investment value of the Hong Kong tech sector. Investors may consider observing cautiously and timing their entry to capture opportunities for low-level allocation.

Fund fee explanation:

1. Trading fees for the Hang Seng Stock Connect Tech 30 ETF Industrial and Commercial Bank of China in the exchange market are subject to the actual charges collected by the securities firms. Subscription fee: when investors apply to subscribe for fund shares, the subscription and redemption agent securities firms may collect commissions at a rate of no more than 0.5%, which includes relevant fees collected by the securities exchange, registration institutions, and so on. Redemption fee: when investors redeem fund shares, the subscription and redemption agent securities firms may collect commissions at a rate of no more than 0.5%, which includes relevant fees collected by the securities exchange, registration institutions, and so on. Management fee rate: 0.45% per year; custody fee rate: 0.07% per year.

2. The ICBC Guo Zheng Hang Seng Stock Connect Tech ETF feeder fund (initiating) has two share classes: Class A and Class C. The fee rates are as follows: management fee is 0.45% per year, custody fee is 0.07% per year, and sales service fee: Class A—no charge, Class C—0.1%. Class A subscription fee rate: for subscription amount M, when M<1 million yuan, the fee rate is 1.00%; when 1 million yuan≤M<3 million yuan, the fee rate is 0.80%; when 3 million yuan≤M<5 million yuan, the fee rate is 0.60%; when M≥5 million yuan, the fee is 1000 yuan per order. Class C does not charge a subscription fee. Class A and Class C redemption fee rate: holding period is Y. When Y<7 days, the redemption fee rate is 1.5%; when Y≥7 days, the redemption fee rate is 0%.

Risk disclosure: The fund manager manages and uses fund assets according to the principles of due diligence, honesty and credibility, and prudent diligence, but does not guarantee that the fund will definitely generate profits or guarantee any minimum level of returns. Past performance of the fund does not indicate future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of this fund’s performance. The Hang Seng Stock Connect Tech 30 ETF Industrial and Commercial Bank of China is an equity-type fund. Its risks and returns are higher than those of hybrid funds, bond funds, and money market funds. This fund is an index fund; it mainly adopts a full replication strategy, tracking the market performance of the underlying index. It has risk-and-return characteristics similar to those of the underlying index and the securities market represented by the underlying index. The ICBC Guo Zheng Hang Seng Stock Connect Tech ETF feeder fund (initiating) invests mainly in the ICBC Schroders Fund? (actually: Industrial and Commercial Bank of China? ) Guo Zheng Hang Seng Stock Connect Tech Exchange Traded Open-Ended Index Securities Investment Fund. The target ETF is an equity-type fund; therefore, the long-term average risk and expected return level of this fund are higher than those of hybrid funds, bond funds and money market funds. This fund is an ETF feeder fund; by investing in the target ETF to track the performance of the underlying index, it has risk-and-return characteristics similar to those of the underlying index and the securities market represented by the underlying index. If the fund invests in the underlying stocks of the Hang Seng Stock Connect, it must also bear exchange-rate risk and unique risks arising from differences in the investment environment, investment targets, market regimes, trading rules, and so on under the Hang Seng Stock Connect mechanism. Investing in equity funds involves a relatively large risk of returns volatility. Investing in an ETF will face unique risks such as the risk of volatility in the underlying index and the risk that the fund’s portfolio return deviates from the underlying index’s return. Funds involve risk. Before investing, investors should carefully read the legal documents including the “Fund Contract,” “Prospectus,” “Fund Product Information Summary,” and any updates. Based on a comprehensive understanding of product details, fee structures, fee standards of each distribution channel, and after obtaining the sales institutions’ appropriateness opinions, investors should choose investment products that fit their own risk tolerance. Investments should be made cautiously.

Daily Economic News