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In recent years, Chinese brands have taken the world by storm and found their way into consumers’ lives, some even to our stomachs (aka HaiDiLao). We’re definitely no strangers to popular mobile phone brands such as Xiaomi, Huawei and Oppo, which are widely available in the market.
Xiaomi is also known for its other consumer products — I mean, why get a Dyson vacuum cleaner when you can get a Xiaomi Roidmi for half the price? And the brand’s 20,000 mAh power bank may even be more reliable than some of your friends.
Other China tech giants have also made headlines recently — Tencent, which owns WeChat, is setting up a regional hub in Singapore, while Alibaba-backed Ant Group was one of the companies to recently win a digital wholesale bank license.
The speed at which these companies are growing is staggering. Have you stopped to think that beyond using their products and services, we can also share in their success? Yes, you can do more with the launch of a new ETF, the Lion-OCBC Securities Hang Seng TECH ETF.
What is the Lion-OCBC Securities Hang Seng TECH ETF?
It is a newly launched tech-focused ETF (listed on SGX on 10 Dec 2020) that tracks and replicates the performance of the Hang Seng TECH Index, which comprises the 30 largest technology companies listed in Hong Kong, including big and familiar names such as Alibaba, Tencent, Meituan, Xiaomi and JD.com.
Min. trading lot size: Just 10 units
The Lion-OCBC Securities Hang Seng TECH ETF is easily accessible to beginner investors as it is an Excluded Investment Product and does not require customers to pass additional assessments such as the Customer Account Review. Furthermore, with a small lot size of just 10 units, it allows you to get a taste of trading without having to put in too large an amount at the start. You can gain access to 30 top Chinese tech stocks right away instead of having to buy and sell units of all 30 individual stocks and the 30 stocks will be reviewed and adjusted by the fund manager regularly to keep up with the fast-moving tech industry.
Let’s take a closer look at 10 of these tech giants (not listed in any particular order) that are featured in the Lion-OCBC Securities Hang Seng TECH ETF:
1. Xiaomi Corporation
Xiaomi is China’s second-largest smartphone maker. Xiaomi’s latest Mi10T smartphone is packed with impressive specs; there’s also its Poco range and cheaper Redmi line. And ever since its smartphone rival Huawei was hit by US sanctions, Xiaomi’s overseas growth has only been on the rise.
It also produces more than just smartphones, as it’s got a whole range of other smart home products as well, from cleaning gear and home appliances to smart watches and air and water purifiers.
A more interesting development is that the company’s financial arm, Xiaomi Finance, is part of a consortium comprising Hong Kong financial services group AMTD, peer-to-peer lending platform Funding Societies, and Singapore utilities provider SP Group, which recently won a digital wholesale bank license.
2. Tencent Holdings Ltd
Do we even need face-to-face interaction anymore? The internet giant owns instant messaging software QQ and WeChat, which are just HUGE.
QQ offers everything from chatting and games to music, shopping and movies, while WeChat, in addition to messaging, also lets users play games and do mobile payments. Tencent’s revenue rose 29% year-on-year to reach $18 billion in the third quarter of 2020, mainly because of its revenue gained from online gaming.
3. Alibaba Group Holding Ltd + Alibaba Health Information Technology Ltd
Alibaba has its hands in just about everything from e-commerce (Taobao, Tmall, Lazada) and e-payments (Alipay) to logistics (Cainiao), cloud computing (Alibaba Cloud) and media and entertainment (AliMusic).
It even has a healthcare arm which provides pharmaceutical and health products, as well as health insurance. Everyone needs healthcare, especially when facing an ageing population or a global pandemic such as Covid-19. This makes healthcare one of the more resilient sectors even when there’s a global recession.
4. Lenovo Group Ltd
Ah, trusty, reliable laptops from the Lenovo Thinkpad range (consistently known for its strong build and powerful specs) to the Lenovo Yoga series (sleek aesthetics and hinged screen), Lenovo’s laptops and tablets remain serious contenders in the market.
The Group has also expanded into making smartphones, smart televisions and wearables.
5. FIT Hon Teng Ltd
We’re familiar with Belkin cables, power banks and wireless chargers that are lifesavers when it comes to providing juice for our smartphones. Belkin also happens to be a subsidiary of Taiwanese electronics manufacturer, FIT Hon Teng, better known as Foxconn Interconnect Technology. Foxconn is also one of the major suppliers of Apple products.
FIT’s other brands include Linksys, Phyn and Wemo and it manufactures a whole range of products such as antennas, communication equipment, electronic and optoelectronic connectors and industrial and green energy field products.
Recently, Foxconn also announced plans to focus on manufacturing electric vehicles (EVs), with aims to provide components or services for as much as 10% of the world’s EVs from 2025 to 2027. Seeing how well American electric vehicle and clean energy company Tesla is doing, EVs are probably the way forward.
6. Sunny Optical Technology (Group) Co. Ltd
This manufacturer of optical lenses such as mobile phone camera modules, microscopes, glass lenses and prisms, is a supplier to Chinese smartphone brands including Huawei, Oppo and Vivo. With the global augmented reality and virtual reality market projected to account for a revenue of US$1.2 billion in 2030, there’s potential growth for Sunny.
7. Semiconductor Manufacturing International Corporation
SMIC is China’s largest chipmaker, with clients including household names such as Broadcom and Texas Instruments. They have also been involved in joint ventures with Huawei, Qualcomm and IMEC International.
The company recently announced a next-generation foundry node, FinFET N+1, which places it closer to industry leaders such as Taiwan Semiconductor Manufacturing Company and Samsung. SMIC is seen as a key player in the ongoing US-China trade war, with Beijing hoping to produce 70% of semiconductors used by Chinese companies by 2025. As a partially state-owned company, SMIC enjoys massive government support, especially considering export restrictions placed on the firm by the US.
8. JD.com, Inc
JD is China’s second-largest e-commerce retailer after Alibaba’s TMall. The company has made headlines for its innovative use of technology, including the use of smart delivery vehicles to provide contactless deliveries in pandemic-hit cities such as Wuhan.
It has also become China’s first online retailer to use digital yuan, the cryptocurrency backed by the Chinese central bank.
9. NetEase Inc
NetEase makes most of its money through online gaming. Unless you’re a gamer, you may or may not have heard of it (it’s really big in China though), but you will definitely be familiar with games like World of Warcraft or Overwatch. NetEase has partnered with Blizzard Entertainment to license those games to the lucrative Chinese gaming market. The company also produces its own games, including the popular Fantasy Westward Journey series of role-playing games based on the classic Journey to the West.
In addition, NetEase operates one of China’s largest music streaming services, NetEase Cloud Music. Over 800 million users are registered on NetEase Cloud Music. By comparison, Spotify had about 286 million active users.
10. XD Inc
XD Inc is another major game operator in China and has produced numerous web and mobile games, including Ragnarok M, Shen Xian Dao and Sausage Man. It also operates the TapTap gaming network, allowing Chinese users access to Android games from around the world as Google Play is blocked there.
How to invest with the Lion-OCBC Securities Hang Seng TECH ETF
The ETF is now listed on SGX and you can simply start trading it like any other stock. You can also invest in it using your Supplementary Retirement Scheme (SRS). Find out more about the Lion-OCBC Securities Hang Seng TECH ETF.
Understanding the risks
The ETF is subjected to the following principal risks including but not limited to market risk, index sector risks, concentration risk, tracking error risk, foreign exchange risk and risk factors relating to the index. Some or all of the risks may adversely affect the Fund’s Net Asset Value, yield, total return and/or its ability to achieve its investment objective. You should note the risk factors associated with investing in the ETF. The statements in the prospectus are intended to be summaries of some of these risks. They are by no means exhaustive and they do not offer advice on the suitability of investing in the ETF. You should read the prospectus and carefully consider the risk factors described together with all of the other information included in the prospectus before deciding whether to invest in the ETF.
Trading in securities, futures and/or leveraged foreign exchange and borrowing to finance the trading of securities (leveraging/gearing) can be very risky, and you may lose all or more than the amount invested or deposited. Where necessary, please seek advice from an independent financial adviser regarding the suitability of any trade or investment product taking into account your investment objectives, financial situation or particular needs before making a commitment to trade or purchase the investment product. You should consider carefully and exercise caution in making any trading decision whether or not you have received advice from any financial adviser. If you choose not to seek independent financial advice, please consider whether the trade or product in question is suitable for you.
All views expressed here belong to and are independent opinions of MoneySmart and are for information purposes only. They do not take into account the specific objectives, financial situation or particular needs of any particular person. You should not make any decisions without independently verifying or assessing the contents. OCBC Securities Private Limited (“OCBC Securities”) does not endorse and makes no representation or warranty whatsoever in respect of any view expressed here and shall not be responsible for any loss or damage whatsoever arising, directly or indirectly, howsoever as a result of any person acting on any view expressed here.
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