9 MONTH FIXED COUPON NOTE ON CHINA INTERNET AND TECH ETFs KWEB US, 3067 HK

USD | 10% P.A. GUARANTEED COUPON | MONTHLY KO OBSERVATIONS




WEEKLY INVESTMENT IDEAS - 20211213 - China Tech
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Chinese technology shares declined after US SEC announced its final plan for putting in place a new law last week that mandates foreign companies open their books to US scrutiny or risk being kicked off the NYSE and Nasdaq within three years.


The declines were on top of those experienced over the past half year as authorities’ increased regulatory oversight of the industry – which resulted downward re-ratings as investors price in a slower pace of growth. Indeed, share prices of the largest Chinese technology companies have declined to levels where they trade at attractive valuations. Leading tech companies such as Tencent (700 HK), Alibaba (BABA/9988) and JD.com (JD/9618) are UOBKH sector top picks with upside of 20%, 36%, and 31% respectively.


Investors can gain diversified exposure to portfolios of Chinese technology companies through a FCN with a basket of China technology ETFs as underlying. This strategy avoids company specific risks whilst being exposed to industry-specific risks, a large part of which is common to each of the underlying ETFs. Aggressive investors may consider purchasing these ETFs directly.


The Kraneshares CSI Chinese Internet ETF (KWEB US) provides exposure to Chinese internet companies listed on both US and Hong Kong exchanges, which benefit from increasing domestic consumption by China's growing middle class.

The iShares Hang Seng Tech ETF (3067 HK) provides physical access to the 30 largest stocks, listed on the Hong Kong Stock Exchange, in the technology sector or with tech enabled businesses.