With all the political unrest swarming the country of Hong Kong, it might seem that the last thing investors want to do is allocate capital to the region. However, one investment banker is seeing no change in the way money is flowing into the country.
“How does this (unrest) affect you buying exposure to a good asset that has presence in China, and is growing? None of those things have any correlation with the Hong Kong protests,” said a senior banker with a global investment bank.
As for the IPO market, which has seen a lot of activity the past year, the Hong Kong protests have not tempered investments into Hong Kong-based startups.
“I don’t think I have received even one phone call saying ‘we shouldn’t be doing this IPO because of what’s happening in Hong Kong’,” said the banker.
According to a Reuters report, “Companies raised $15 billion in new listings in Hong Kong in the first nine months of 2019, second only to New York, according to Refinitiv data. While the protests have hurt tourism and retail sectors, threatening to send Hong Kong into its first recession in a decade, its proximity to the massive Chinese market and locally listed firms’ presence there are more important, bankers and analysts say.”
What Does All This Hong Kong News Mean
It could be that the constant flood of news coming out of Hong Kong is becoming standard fare to those on the outside looking in.
“I think people are getting used to the weekly events,” Steven Leung, executive director for institutional sales at brokerage UOB Kay Hian, said of the protests.
“The impact was seen in the initial one to two months in share prices, and mostly in retail, property and tourism,” he added. “(But) the index mostly reflects onshore Chinese market and economy. Hong Kong companies’ share is not that big.”
One way for investors to get exposure to Hong Kong is via the iShares MSCI Hong Kong ETF (NYSEArca: EWH). Despite all the negative news coming out of Hong Kong, the fund is still up 8.95% according to Yahoo Finance.
The iShares MSCI Hong Kong ETF seeks to track the investment results of an index composed of Hong Kong equities. The underlying index consists of stocks traded primarily on the Stock Exchange of Hong Kong Limited (SEHK), which may include large- or mid-capitalization companies.
- Exposure to large and mid-sized companies in Hong Kong
- Targeted access to the Hong Kong stock market
- Use to express a single country view
For more market trends, visit ETF Trends.