Hang Seng IM launches Hang Seng TECH Index ETF

Sep 7th, 2020 | By | Category: Equities

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Hang Seng Investment Management has become the third issuer to roll out an ETF linked to the in-demand Hang Seng TECH Index of Chinese technology stocks.

Hang Seng TECH Index ETFs

Hang Seng IM celebrated the ETF’s launch by participating in a virtual listing ceremony with the HKEX.

The Hang Seng TECH Index ETF (3032 HK) has listed on the Stock Exchange of Hong Kong and is available to trade in Hong Kong dollars.

It comes with an annual management fee of 0.55%; ongoing charges are estimated at 0.87%.

Hang Seng IM follows fellow asset managers CSOP and ChinaAMC which have both launched almost identical products within the past fortnight.

The CSOP fund, the CSOP Hang Seng TECH Index ETF (3033 HK), was the first to debut and broke the Hong Kong stock exchange’s record for the highest turnover on an ETF’s listing day, registering over HK$3 billion in flows. Assets under management currently stand at HK$3.5bn (approx. $450 million). The ETF comes with a management fee of 0.99%; annual ongoing charges are estimated to be 1.49%.

CSOP’s immediate success highlights how investors are eager to access the booming Chinese technology sector which, in line with tech stocks globally, has soared during the Covid-19 pandemic.

Index methodology

The index consists of Greater China-incorporated stocks that specifically have high business exposure to the internet, fintech, cloud computing, e-commerce and digital technology themes. Companies must also be “technology-enabled” (i.e. operate primarily on an internet or mobile platform) or have an R&D expenses-to-revenue ratio that is greater than or equal to 5%, or revenue growth that is greater than or equal to 10%.

The 30 largest stocks as ranked by market capitalization that meet these criteria are selected to form the index. Constituents are weighted by free-float market capitalization, subject to a cap of 8% on any individual stock. Major positions currently include well-known Chinese names such as Xiaomi, Meituan Dianping, Alibaba, Tencent, Sunny Optical, JD.com. Other familiar holdings include Lenovo, NetEase, and Ping An Healthcare & Technology.

In anticipation of fintech giant Ant Financial’s upcoming flotation and with other high-growth tech stocks in the IPO pipeline, the index methodology includes a ‘Fast Entry Rule’ to facilitate fast-tracked inclusion for suitably qualified potential members.

Exposure to technology players

Rosita Lee, Chief Executive Officer of Hang Seng Investment Management, commented, “We are delighted to be launching the Hang Seng TECH Index ETF which will enable investors to capture the growth potential of the selected technology sectors by investing in a basket of diversified and representative technology-theme-related stocks. As a major ETF provider in Hong Kong, we hope the launch of this ETF will further enrich our current line of products and help advance the development of the ETF market in Hong Kong.”

Wilfred Sit, Chief Investment Officer of Hang Seng Investment Management, said, “The past several years have seen many significant developments in the nature and scope of the technology sector. The pace of these developments has further accelerated this year, with the Covid-19 pandemic driving major changes in the ways we live and work and expediting the growth and adoption of online services. While the technology-related sector, which is still in an early stage of development, currently displays a relatively high level of volatility compared with many other traditional sectors, we are upbeat about its long-term investment potential.”

Anita Mo, Chief Executive Officer of Hang Seng Indexes, added, “As technology becomes ever-more integrated into many aspects of our daily lives, investors have increasing interest in technology stocks that have growth potential. We launched the Hang Seng TECH Index to make it easier for investors to track the performance of sizeable and innovative companies in this sector and to facilitate the development of various index-linked ETFs and other related products. We are pleased to see the launch of Hang Seng TECH Index ETF which offers investors exposure to a portfolio of main technology players listed in Hong Kong.”

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One Comment to “Hang Seng IM launches Hang Seng TECH Index ETF”

  1. Thomas Troestl says:

    Thanks for the helpful info. I am a retail investor in Europe. Can I buy these ETFs? e.g. the newly launched iShares Hang Seng TECH ETF is not available in Europe only in Asia.

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