Investment Solutions


Investment Solutions


Investment Solutions


Why Invest in Hong Kong Stocks?

Rene Anthony

Thursday, April 7, 2022

Thursday, April 7, 2022

With Selfwealth committed to offering members more choice and opportunity to invest in the stocks and themes that matter to you most, we recently launched Hong Kong share trading.

With Selfwealth committed to offering members more choice and opportunity to invest in the stocks and themes that matter to you most, we recently launched Hong Kong share trading.

The Hong Kong Stock Exchange (HKEX) may be new to many of our members, but there are a number of reasons why this market is considered a global benchmark and attracts investment from all corners of the globe. 

You can now add Hong Kong trading to your Selfwealth account, but in the meantime, let take a look at some of the benefits of investing in Hong Kong stocks.

Take Advantage of More Investment Choice

While we all love the comfort and familiarity that the ASX brings, in the grand scheme of things the local share market represents just 2% of all opportunities by value across global equity markets.

And as high-profile as the US share market may be, that doesn't mean it should be the only consideration for international stocks when there are so many other opportunities in other regions.

The Hong Kong Stock Exchange is the sixth-largest stock market in the world. It is home to some of the most-valuable companies, while the Hang Seng Index is a well-known benchmark for share trading across the Asia-Pacific and further afield.

Selfwealth offers trading in more than 2,500 financial instruments listed on the Hong Kong Stock Exchange, which means even more choice to find the right investment for your portfolio, regardless whether you are a novice or a seasoned professional.

Target Specific Investment Themes or Types of Stocks

It is often thought of that the ASX is tailored towards dividend investors, while the US stock market is more focused on growth. When it comes to Hong Kong stocks, the profile is often aligned with growth as well. After all, the HKEX provides a window to Chinese companies that are on the precipice of significant growth in mainland China and across the world.

The HKEX has also established itself as a leading market for tech stocks. With no shortage of high-profile tech companies to choose from, including many that are taking on US giants like Amazon, Apple, Alphabet, Microsoft, Tesla and Meta, investing in Hong Kong shares provides another avenue to invest in growth stocks. 

When you consider that Australia tech sector is still very much limited in breadth and scale, with few high-profile names known all over the world, the HKEX offers a different investment theme compared with the heavy bias' towards resources and financials found on the ASX.

What more, the Hong Kong stock market provides exposure to global tech stocks at what may be considered an earlier point in their global trajectory, and often at lower price-to-earnings valuations compared with their more well-known US peers. 

Investing in Hong Kong stocks can also provide another avenue to hone in on some of the major trends unfolding right now. For example, take electric vehicles. The HKEX is home to the likes of BYD Company (HKG: 1211), Nio (HKG: 9866), Li Auto (HKG: 2015) and Xpeng (HKG: 9868). How many EV manufacturers are listed on the ASX? Could any of these HK-listed names be the next Tesla?

A Conviction-Based Alternative to ETFs

Selfwealth community data shows that the BetaShares Asia Technology Tigers ETF (ASX: ASIA) is one of the most-popular funds held by members across our trading platform, with its tech focus being a major drawcard for many investors.

While an ETF is great for those looking to spread their investment across a number of holdings and reduce their risk, investing directly in Hong Kong stocks means that you can specifically target the names that matter to you most. 

Are you looking to invest in Tencent (HKG: 0700) but don't want exposure to Alibaba (HKG: 9988)? That what direct investments allow. You can also have more control over when you buy or sell the holding, whereas in an ETF the fund manager will decide for you. 

Do keep in mind, however, investing directly in any given stock increases your risk exposure. This is why the experts regularly speak to the benefits of a diverse portfolio and often suggest that you don't put all your eggs in one basket.

Ride the Wave of the Second-Largest Economy in the World

China economic growth has been a story to behold for much of the last decade, with the country transforming itself into a superpower on the global stage.

This has been largely driven by a rising middle class, as well as the advent of technology, not to mention massive investment in infrastructure and development before and after the 2008 Olympics.

More than a decade after China overtook Japan to become the second-largest economy in the world, many economists believe China could overtake the US to become the biggest economy by the end of the decade, or shortly thereafter. In fact, if you take into consideration purchasing power parity, China technically went ahead of the US as the biggest economic power back in 2014.

Given the significant population that Chinese companies serve every day in nearly all facets of life, investing in Hong Kong stocks provides direct exposure to this rapidly-growing powerhouse, and with that, exposure to policy development and investment driving the nation economy.

Further Portfolio Diversification

We've previously discussed the benefits of diversification when investing in US stocks, and it is the same principle at play with Hong Kong stocks. Ultimately, Hong Kong stocks provide exposure to a different geography, which is another means of portfolio diversification. 

International shares may also be considered another type of asset allocation, and you need only look at your super fund to realise that investing in international stocks is a well-recognised way to achieve diversification that has the potential to reduce portfolio volatility.

Remember, investing in Hong Kong stocks, or any region for that matter, provides exposure to foreign exchange movements, as well as risks spanning geopolitics, regulatory events, conflict, trade and the like.

If you haven't already done so, make sure you add Hong Kong trading to your Selfwealth account today.

Important disclaimer: SelfWealth Ltd ABN 52 154 324 428 (“Selfwealth”) (AFSL 421789). The information contained on this website is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser and/or accountant. Taxation, legal and other matters referred to on this website are of a general nature only and should not be relied upon in place of appropriate professional advice. You should obtain the relevant Product Disclosure Statement for any product mentioned and consider its contents before making any decision.