[Exclusive] China Hang Seng Tech ETF Has Risen Significantly, Is It Still Worth Investing?

'TIGER China Hang Seng Tech' Surpasses 1 Trillion Won in Net Assets... Up 89% Since September 1 Last Year
KODEX China Hang Seng Tech ETF Rises 31.6% This Year
"Long-term Uptrend Expected to Continue Despite Short-term Corrections"

The Hong Kong Hang Seng Index (HSI) and the Hong Kong H-Share Index (HSCEI) have risen sharply this year, fueling strong investment enthusiasm in the Chinese stock market. In particular, funds are pouring into exchange-traded funds (ETFs) that allow investment mainly in China’s leading big tech companies.

According to the financial investment industry on the 24th, the TIGER China Hang Seng Tech ETF surpassed 1 trillion won in net assets. The cumulative net purchase amount by individuals reached 89.7 billion won as of the 20th of this year. From September 1 to the 20th of last year, when the Chinese government announced stimulus measures, the return rate recorded was 89.2%.

The KODEX China Hang Seng Tech ETF, with net assets close to 200 billion won, has posted a return of over 30% this year. The 1-month and 3-month returns were recorded at 8.1% and 36.6%, respectively. The 6-month returns of the RISE China Hang Seng Tech ETF and ACE China Hang Seng Tech ETF were 84.7% and 76.6%, respectively.

As China Hang Seng Tech ETFs launched by leading domestic asset management companies have all recorded high returns, individual investors are curious whether it is a good time to invest now. Experts in the financial investment industry advise that these are investment assets to keep an eye on from a medium-term investment perspective.

Jeong Jeong-young, a researcher at Hanwha Investment & Securities, explained, "With the investment cycle led by private companies underway, an attractive situation is unfolding in the Hong Kong stock market over the long term," adding, "There is a high correlation between the growth rate of capital investment by China’s leading private companies such as Alibaba and Tencent and the Hang Seng Index." He continued, "Alibaba has announced plans to invest 380 billion yuan over the next three years to build cloud and artificial intelligence (AI) infrastructure," adding, "This exceeds Alibaba’s total investment of 364.4 billion yuan over the past 10 years."

Choi Won-seok, a research fellow at Shinhan Investment Corp., analyzed, "The main participants in the Hong Kong tech stock rally are funds from mainland China," and "foreign investors have not been able to join the tech stock rally, so there is room for additional inflows."

The asset management industry also expects that although there may be corrections after a sharp rise in the short term, there is potential for further gains in the mid to long term.

Lee Ho-nyeon, head of ETF Management Team 1 at Mirae Asset Global Investments, said, "The Chinese authorities are emphasizing active support for Chinese tech companies as a means to narrow the gap in competition with the U.S.," and predicted, "The rebound trend centered on tech stocks will continue for the time being." However, he advised, "Compared to the Korean or U.S. stock markets, the Chinese market is more heavily influenced by the government and lacks much information," adding, "Rather than investing heavily at once or in highly volatile individual stocks, it seems better to invest steadily through a long-term, installment savings approach."

Lee Su-jin, head of ETF Product Marketing at KB Asset Management, said, "We maintain a positive view on Chinese tech stocks from a medium-term perspective," but also analyzed that "risk management is necessary due to the recent sharp rise." He added, "We need to be cautious about short-term price burdens," and "investment funds may relatively concentrate on stocks with attractive valuations."