Time to Invest $ into HK ETFs

I bought H-Share Index ETF (HK:2828) at $94.5 on 9 Nov 2016, immediately after Donald Trump won the US Presidential Election, and my target price is when its p/e reaches about 11x which happens to be an auspicious number of $138! I will buy more of it if there is a significant pullback of its share price.

I noticed most Singapore investors do not buy stocks from the HK Stock Exchange (HKEx). But I seriously think that the time has come for us to park some money or increase our investment in some gems listed on HKEx. If you are not familiar with HK stocks or have no time to do your due diligence to sieve out the gems there, buying index ETFs can be a good option and it is good to know that you need not pay stamp fees when you purchase HK ETFs.

Why buy stocks or ETFs from HK market now? 

(1)    The inclusion of 222 large cap A-shares into MSCI Emerging Market index in next June and this will make both A-shares listed on Shanghai and Shenzhen bourses hot 6 to 9 months before that. 

(2)    As of today, A-shares listed on Shanghai and Shenzhen bourses are still on average 27 percent more expensive than H-shares listed on HK Stock Exchange. 

(3)    The recent depreciation of the US$ against RMB has made Shanghai and Shenzhen fund managers very busy in moving their funds to HK market to grab the relatively cheaper and cheaper blue chips like big banks, insurance companies and tech stocks, as HK$ has been pegged to the US$ and has been weakening in tandem with the US$. This is really no brainer to the China fund managers and the Shanghai-HK Stock Connect and Shenzhen-HK Stock Connect have provided the convenience for them in doing so.

(4)    The p/e of Hang Seng Index is at 13.1x, Singapore STI is at about 15.1x, and H-share ETF 2828 is only at about 9.1x. Value investors simply cannot ignore this undervalued ETF!

Below is my compilation of all major ETFs listed on HK Stock Exchanges:            

                                                                Price            Mkt Cap        Expense

Name of ETF                    Listed on      on 4 Aug     (b HK$)          ratio (%)

HS H ETF (2828)              12/10/2003    112.8             40.1              0.64

Tracker Fund (2800)         11/12/1999     28.25            96.3                0.1

CSOP A50 (2822)             11/8/2012      13.7               24.1              1.08

ISHARES A50 (2823)        11/18/2004    13.2               28.7              0.99

CAM CSI300 (3188)          10/26/2012    44.1              12.6               0.83

199 component stocks, out of a total of 300, of CAM CSI300 (3188) belong to the 222 selected large cap A-share which will be included into MSCI EM index. These 199 stocks jointly constitute about 80.1% of the total value of the CAM CSI300 (3188) portfolio.

I like 2828 the best for its acceptable yield (1.77%), low p/e, low expense ratio, big market cap and negative premium to A-shares. I also like 3188 for its closeness to the basket of 222 large cap A-shares which are soon to be included into MSCI EM index. 2800 is also on my radar for its large market cap and its lowest expense ratio.

I am aboard the fast-moving train and have been enjoying the ride. I believe it will accelerate before next June when the 222 large cap A-shares are included into MSCI EM index.

Superphang
http://superphang.blogspot.sg