ETFs that provide exposure to Hong Kong and Chinese markets

ETFs

New-age investors consider global diversification a part of their strategy. Today, investors are looking for avenues beyond the Indian and US markets that grow at different speeds. In this context, Hong Kong and China have been attracting the attention of Indian investors. 

With ETFs offering easy access to these markets without requiring an overseas demat account, many investors are exploring avenues in China. In this blog, we will cover some of these ETFs that can help you diversify across Asian markets.

Why invest in ETFs that provide exposure to Chinese markets

ETFs based on Hong Kong Chinese markets allow investors to tap into some of the largest companies operating in Asia. Many global businesses, particularly in technology and finance, are listed in Hong Kong. These stocks give you exposure to Chinese markets.

With these ETFs, you can diversify your portfolio beyond Indian equities, which reduces your dependence on a single economy. 

Moreover, these ETFs help investors gain exposure to sectors that domestic markets may not fully represent. In the process, you gain a broader range of opportunities to ride the growth trajectory in global markets.

Popular ETFs that can help you diversify across Chinese markets

You may consider investing in the following two ETFs to gain exposure to Chinese markets.

  1. Mirae Asset Hang Seng Tech ETF

The Mirae Asset Hang Seng Tech ETF invests in technology-oriented companies listed in Hong Kong. Therefore, you gain exposure to businesses involved in eCommerce, innovations, and digital platforms. 

This fund would suit your portfolio if you are interested in participating in the growth of the technology sector in China. However, investors must note that technology companies can be sensitive to regulatory norms and market sentiment. This leads to a higher risk in this sector. If you’re comfortable with market fluctuations and have a long-term horizon, you may consider including this ETF in your portfolio.

  • 1-Year returns: 8.84%
  • 3-Year returns: 68.71%
  • 5-Year returns: 21.64%
  • Expense ratio: 0.62% 
  1. Nippon Hang Seng ETF

The Nippon Hang Seng ETF tracks a broader set of companies listed on the Hong Kong market. This ETF will help you diversify your investments across sectors like finance, real estate, and consumer businesses in the Chinese market.

It carries a moderate risk profile, as it reflects how companies listed in Hong Kong perform in general. If you’re seeking steady international exposure but do not want to focus on any single sector, this fund can be an option.

  • 1-Year returns: 38.68%
  • 3-Year returns: 84.34%
  • 5-Year returns: 41.12%
  • Expense ratio: 0.93%

Pros and cons of investing in Hong Kong ETFs

Let’s take a look at the benefits of investing in ETFs listed in Hong Kong. Investors must also take care against the drawbacks.

Pros

  • The diversification you get within the Asian market through Hong Kong ETFs is one of their biggest strengths. You can spread your risk across different demographics and industries.
  • Another benefit is easy accessibility, as you can buy and sell ETFs like stocks in the regular market.

Cons

  • Global factors like currency movements and international economic conditions heavily influence the performance of these ETFs.
  • Regulatory changes in China may affect the performance of the company, particularly in sectors like technology.

Conclusion

ETFs based on the Hong Kong and Chinese markets offer you a practical way to expand the range of your investments beyond India and the US. The ease of access, along with global exposure, makes them suitable for investors looking to diversify globally.

Although every ETF comes with its own risks, a well-planned approach can benefit investors with a long-term mindset. Consider your risk profile and include one of these ETFs in your portfolio to balance it with international exposure.  

  • Rhonda Brooks

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