SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

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<ul>
<li>
The Lion-OCBC Securities Hang Seng TECH ETF will commence trading on SGX on 10 December 2020, offering investors low cost and direct access to 30 of the world’s largest Chinese technology companies. 
	 </li>
	<li>
The ETF tracks the Hang Seng TECH Index, which comprises leading technology-themed companies across the information technology, industrials, healthcare, consumer and financials sectors, including Xiaomi, Meituan Dianping, Tencent and JD.com. 
	 </li>
	<li>The Hang Seng TECH Index has outperformed major global indices amidst the global pandemic, with Chinese technology giants enjoying a growth surge during the coronavirus pandemic in areas from healthcare to cloud computing.</li>
</ul>
 

The Lion-OCBC Securities Hang Seng TECH ETF, jointly established by Lion Global Investors and OCBC Securities, will list on Thursday, 10 December 2020, kicking off with US$64 million in assets under management. It is also Singapore’s first tech-focused ETF listed on SGX. 
The ETF seeks to replicate the performance of the Hang Seng TECH Index (HSTECH), which represents the 30 largest Chinese technology companies that have high exposure to themes such as cloud, digital, e-commerce, fintech or Internet, and are considered innovative by operating a technology-enabled business, with strong Research &amp; Development investment, or exhibit robust revenue growth. 
The Index is free-float, market capitalisation-weighted, with 8% cap on individual constituent weighting and rebalances quarterly. HSTECH Index Top 10 Constituents

<table class="table table-striped"><tbody>
<tr>
<td>
			Company Names
			</td>
			<td>
			Industry Classification
			</td>
			<td>
			Weighting (%)
			</td>
		</tr>
<tr>
<td>
			Tencent Holdings Ltd
			</td>
			<td>
			Information Technology
			</td>
			<td>
			8.92
			</td>
		</tr>
<tr>
<td>
			Meituan-Dianping
			</td>
			<td>
			Information Technology
			</td>
			<td>
			8.86
			</td>
		</tr>
<tr>
<td>
			Sunny Optical Technology Ltd
			</td>
			<td>
			Industrials
			</td>
			<td>
			8.77
			</td>
		</tr>
<tr>
<td>
			Alibaba Group Holdings Ltd
			</td>
			<td>
			Information Technology
			</td>
			<td>
			8.43
			</td>
		</tr>
<tr>
<td>
			Alibaba Health Information Technology Ltd
			</td>
			<td>
			Healthcare
			</td>
			<td>
			3.60
			</td>
		</tr>
<tr>
<td>
			Semiconductor Manufacturing International Corp
			</td>
			<td>
			Information Technology
			</td>
			<td>
			7.55
			</td>
		</tr>
<tr>
<td>
			Xiaomi Corporation
			</td>
			<td>
			Information Technology
			</td>
			<td>
			7.40
			</td>
		</tr>
<tr>
<td>
			JD.com
			</td>
			<td>
			Information Technology
			</td>
			<td>
			6.99
			</td>
		</tr>
<tr>
<td>
			Kingdee International Software Group Limited
			</td>
			<td>
			Information Technology
			</td>
			<td>
			5.69
			</td>
		</tr>
<tr>
<td>
			Lenovo Group Ltd.
			</td>
			<td>
			Information Technology
			</td>
			<td>
			4.23
			</td>
		</tr>
</tbody></table>
 Source: Hang Seng Indexes, October 2020

 

Industry Weightings in HSTECH Index

<table class="table table-striped"><tbody>
<tr>
<td>
			Industry
			</td>
			<td>
			No. of Constituents
			</td>
			<td>
			Weighting (%)
			</td>
		</tr>
<tr>
<td>
			Information Technology
			</td>
			<td>
			18
			</td>
			<td>
			69.12
			</td>
		</tr>
<tr>
<td>
			Industrials
			</td>
			<td>
			3
			</td>
			<td>
			11.76
			</td>
		</tr>
<tr>
<td>
			Healthcare
			</td>
			<td>
			2
			</td>
			<td>
			10.62
			</td>
		</tr>
<tr>
<td>
			Consumer Discretionary
			</td>
			<td>
			5
			</td>
			<td>
			6.87
			</td>
		</tr>
<tr>
<td>
			Financials
			</td>
			<td>
			2
			</td>
			<td>
			1.63
			</td>
		</tr>
<tr>
<td>
			Overall
			</td>
			<td>
			30
			</td>
			<td>
			100
			</td>
		</tr>
</tbody></table>
 Source: Hang Seng Indexes, October 2020

 

Hang Seng TECH Index Outperformed Major Global Indices 
Hang Seng TECH Index has outperformed major global indices in 2020 amidst the global pandemic, with Chinese technology giants enjoying a growth surge during the coronavirus pandemic, in areas ranging from healthcare to cloud computing. The two largest Chinese tech companies, Alibaba and Tencent, have seen their share prices rally by 26% and 58% respectively in the 2020 year-to-date. 
As China and US bilateral tensions continue to simmer, an increasing number of Chinese tech companies listed in the US are returning home to list in China's mainland market or Hong Kong. The Hang Seng TECH Index has an IPO fast-entry mechanism to prepare for the homecoming of foreign-listed Chinese companies and the new listing of Chinese “unicorns” in Hong Kong. The rule enables sizable newly listed technology companies to be included in the index in a timely manner without the need to wait until the quarterly review.
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<figure>
 <img src='https://api2.sgx.com/sites/default/files/2020-12/Capture_5.PNG' alt='Performance of Hang Seng Tech Index against major stock indices' />
 </figure>
 <div class='content-caption'>Performance of Hang Seng Tech Index against major stock indices</div>
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<table class="table table-striped"><tbody>
<tr>
<td>
			Index – Total Return
			</td>
			<td>
			1-Mth
			</td>
			<td>
			3-Mth
			</td>
			<td>
			6-Mth
			</td>
			<td>
			1-Yr
			</td>
			<td>
			YTD
			</td>
		</tr>
<tr>
<td>
			Hang Seng TECH Index
			</td>
			<td>
			3%
			</td>
			<td>
			5%
			</td>
			<td>
			141%
			</td>
			<td>
			90%
			</td>
			<td>
			70%
			</td>
		</tr>
<tr>
<td>
			NASDAQ 100 Index
			</td>
			<td>
			7%
			</td>
			<td>
			8%
			</td>
			<td>
			131%
			</td>
			<td>
			52%
			</td>
			<td>
			45%
			</td>
		</tr>
<tr>
<td>
			CSI 300 Index Index
			</td>
			<td>
			7%
			</td>
			<td>
			11%
			</td>
			<td>
			141%
			</td>
			<td>
			45%
			</td>
			<td>
			35%
			</td>
		</tr>
<tr>
<td>
			S&amp;P 500 Index
			</td>
			<td>
			8%
			</td>
			<td>
			8%
			</td>
			<td>
			120%
			</td>
			<td>
			21%
			</td>
			<td>
			16%
			</td>
		</tr>
<tr>
<td>
			Nikkei 225 Index
			</td>
			<td>
			13%
			</td>
			<td>
			18%
			</td>
			<td>
			124%
			</td>
			<td>
			23%
			</td>
			<td>
			22%
			</td>
		</tr>
</tbody></table>
 Source: Bloomberg, based on index total return as of 4-Dec-20

Note: Past returns performance is not indicative of future results.

 

China’s Growth Outlook 
China continued its economic recovery from COVID-19 in the third quarter of 2020, registering year-on-year growth of 4.9%. Although this headline number fell short of economists’ expectations, the broadening of growth on both the demand and supply sides appears to bode well for the rest of the year. Investment and net exports led China’s recovery in demand but, as noted by economists, increasing migrant worker employment numbers and household income suggest that consumption will gain strength in the last quarter of the year. The consensus forecast for China’s growth this year is now 2.2%, and the country remains the only major economy expected to post positive GDP growth in 2020. 
 

Fund Details

<table class="table table-striped"><tbody>
<tr>
<td>
			Listing Date
			</td>
			<td>
			10 December 2020
			</td>
		</tr>
<tr>
<td>
			Fund Manager
			</td>
			<td>
			Lion Global Investors Limited
			</td>
		</tr>
<tr>
<td>
			Index
			</td>
			<td>
			<a href="https://www.hsi.com.hk/eng/indexes/all-indexes/hstech">Hang Seng TECH Index</a>

			 

			Index RIC: .HSTECH / Bloomberg code: HSTECH
			</td>
		</tr>
<tr>
<td>
			Base Currency
			</td>
			<td>
			HKD
			</td>
		</tr>
<tr>
<td>
			ISIN
			</td>
			<td>
			SGXC56627679
			</td>
		</tr>
<tr>
<td>
			Total Expense ratio (TER)
			</td>
			<td>
			68 bps
			</td>
		</tr>
<tr>
<td>
			Replication
			</td>
			<td>
			Physical
			</td>
		</tr>
</tbody></table>
 

<h4>Key Trading Specifications</h4>

<table class="table table-striped"><tbody>
<tr>
<td> </td>
			<td>
			SGD counter
			</td>
			<td>
			USD counter
			</td>
		</tr>
<tr>
<td>
			SGX Trading Name
			</td>
			<td>
			Lion-OCBC Sec HSTECH S$
			</td>
			<td>
			Lion-OCBC Sec HSTECH US$
			</td>
		</tr>
<tr>
<td>
			SGX Stock Code
			</td>
			<td>
			HST
			</td>
			<td>
			HSS
			</td>
		</tr>
<tr>
<td>
			BBG ticker
			</td>
			<td>
			HST SP Equity
			</td>
			<td>
			HSS SP Equity
			</td>
		</tr>
<tr>
<td>
			Trading Lot Size
			</td>
			<td>
			10 shares ( ~S$1.34/share)
			</td>
			<td>
			10 shares ( ~US$1/share)
			</td>
		</tr>
<tr>
<td>
			Tick Size
			</td>
			<td>
			S$0.001
			</td>
			<td>
			US$0.001
			</td>
		</tr>
</tbody></table>
 

<h4>
The product is classified as Excluded Investment Product (EIP) as defined in the Notice on the Sale of Investment Products issued by the Authority. SGX investor classification: Investors who invest in this product expect low to moderate likelihood of loss of principal investment amount, with generally smaller potential returns. Investors who invest in this product have a basic understanding of financial instruments with standardized terms and no unusual or complicated features. 
 </h4>

Investing in ETFs

ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets. 
Each ETF gives investors access to the performance of the asset that comprises the underlying index. Investing in the ETF is also less costly if one was to build a similar portfolio by buying the individual stocks. It also provides exposure to international markets and asset classes that may be inaccessible to individual investors. 
To find out more about ETFs, click <a href="https://www.sgxacademy.com/home/infographics/what-you-need-to-know-about-investing-in-etfs/?utm_source=Research&amp;utm_medium=MU&amp;utm_campaign=ETFs&amp;utm_term=%2708062020&amp;utm_content=Market%20Update">here</a>. 
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The Lion-OCBC Securities Hang Seng TECH ETF will commence trading on SGX on 10 December 2020, offering investors low cost and direct access to 30 of the world’s largest Chinese technology companies.  
	 
	
The ETF tracks the Hang Seng TECH Index, which comprises leading technology-themed companies across the information technology, industrials, healthcare, consumer and financials sectors, including Xiaomi, Meituan Dianping, Tencent and JD.com. 
	 
	The Hang Seng TECH Index has outperformed major global indices amidst the global pandemic, with Chinese technology giants enjoying a growth surge during the coronavirus pandemic in areas from healthcare to cloud computing.

 

The Lion-OCBC Securities Hang Seng TECH ETF, jointly established by Lion Global Investors and OCBC Securities, will list on Thursday, 10 December 2020, kicking off with US$64 million in assets under management. It is also Singapore’s first tech-focused ETF listed on SGX.  
The ETF seeks to replicate the performance of the Hang Seng TECH Index (HSTECH), which represents the 30 largest Chinese technology companies that have high exposure to themes such as cloud, digital, e-commerce, fintech or Internet, and are considered innovative by operating a technology-enabled business, with strong Research &amp; Development investment, or exhibit robust revenue growth.  
The Index is free-float, market capitalisation-weighted, with 8% cap on individual constituent weighting and rebalances quarterly.  HSTECH Index Top 10 Constituents




			Company Names
			
			
			Industry Classification
			
			
			Weighting (%)
			
		


			Tencent Holdings Ltd
			
			
			Information Technology
			
			
			8.92
			
		


			Meituan-Dianping
			
			
			Information Technology
			
			
			8.86
			
		


			Sunny Optical Technology Ltd
			
			
			Industrials
			
			
			8.77
			
		


			Alibaba Group Holdings Ltd
			
			
			Information Technology
			
			
			8.43
			
		


			Alibaba Health Information Technology Ltd
			
			
			Healthcare
			
			
			3.60
			
		


			Semiconductor Manufacturing International Corp
			
			
			Information Technology
			
			
			7.55
			
		


			Xiaomi Corporation
			
			
			Information Technology
			
			
			7.40
			
		


			JD.com
			
			
			Information Technology
			
			
			6.99
			
		


			Kingdee International Software Group Limited
			
			
			Information Technology
			
			
			5.69
			
		


			Lenovo Group Ltd.
			
			
			Information Technology
			
			
			4.23
			
		

 Source: Hang Seng Indexes, October 2020

 

Industry Weightings in HSTECH Index




			Industry
			
			
			No. of Constituents
			
			
			Weighting (%)
			
		


			Information Technology
			
			
			18
			
			
			69.12
			
		


			Industrials
			
			
			3
			
			
			11.76
			
		


			Healthcare
			
			
			2
			
			
			10.62
			
		


			Consumer Discretionary
			
			
			5
			
			
			6.87
			
		


			Financials
			
			
			2
			
			
			1.63
			
		


			Overall
			
			
			30
			
			
			100
			
		

 Source: Hang Seng Indexes, October 2020

 

Hang Seng TECH Index Outperformed Major Global Indices   
Hang Seng TECH Index has outperformed major global indices in 2020 amidst the global pandemic, with Chinese technology giants enjoying a growth surge during the coronavirus pandemic, in areas ranging from healthcare to cloud computing. The two largest Chinese tech companies, Alibaba and Tencent, have seen their share prices rally by 26% and 58% respectively in the 2020 year-to-date.  
As China and US bilateral tensions continue to simmer, an increasing number of Chinese tech companies listed in the US are returning home to list in China's mainland market or Hong Kong. The Hang Seng TECH Index has an IPO fast-entry mechanism to prepare for the homecoming of foreign-listed Chinese companies and the new listing of Chinese “unicorns” in Hong Kong. The rule enables sizable newly listed technology companies to be included in the index in a timely manner without the need to wait until the quarterly review.



      
    
    Performance of Hang Seng Tech Index against major stock indices





			Index – Total Return
			
			
			1-Mth
			
			
			3-Mth
			
			
			6-Mth
			
			
			1-Yr
			
			
			YTD
			
		


			Hang Seng TECH Index
			
			
			3%
			
			
			5%
			
			
			141%
			
			
			90%
			
			
			70%
			
		


			NASDAQ 100 Index
			
			
			7%
			
			
			8%
			
			
			131%
			
			
			52%
			
			
			45%
			
		


			CSI 300 Index Index
			
			
			7%
			
			
			11%
			
			
			141%
			
			
			45%
			
			
			35%
			
		


			S&amp;P 500 Index
			
			
			8%
			
			
			8%
			
			
			120%
			
			
			21%
			
			
			16%
			
		


			Nikkei 225 Index
			
			
			13%
			
			
			18%
			
			
			124%
			
			
			23%
			
			
			22%
			
		

 Source: Bloomberg, based on index total return as of 4-Dec-20

Note: Past returns performance is not indicative of future results.

 

China’s Growth Outlook   
China continued its economic recovery from COVID-19 in the third quarter of 2020, registering year-on-year growth of 4.9%. Although this headline number fell short of economists’ expectations, the broadening of growth on both the demand and supply sides appears to bode well for the rest of the year. Investment and net exports led China’s recovery in demand but, as noted by economists, increasing migrant worker employment numbers and household income suggest that consumption will gain strength in the last quarter of the year. The consensus forecast for China’s growth this year is now 2.2%, and the country remains the only major economy expected to post positive GDP growth in 2020. 
 

Fund Details




			Listing Date
			
			
			10 December 2020
			
		


			Fund Manager
			
			
			Lion Global Investors Limited
			
		


			Index
			
			
			Hang Seng TECH Index

			 

			Index RIC: .HSTECH / Bloomberg code: HSTECH
			
		


			Base Currency
			
			
			HKD
			
		


			ISIN
			
			
			SGXC56627679
			
		


			Total Expense ratio (TER)
			
			
			68 bps
			
		


			Replication
			
			
			Physical
			
		

 

Key Trading Specifications



 
			
			SGD counter
			
			
			USD counter
			
		


			SGX Trading Name
			
			
			Lion-OCBC Sec HSTECH S$
			
			
			Lion-OCBC Sec HSTECH US$
			
		


			SGX Stock Code
			
			
			HST
			
			
			HSS
			
		


			BBG ticker
			
			
			HST SP Equity
			
			
			HSS SP Equity
			
		


			Trading Lot Size
			
			
			10 shares ( ~S$1.34/share)
			
			
			10 shares ( ~US$1/share)
			
		


			Tick Size
			
			
			S$0.001
			
			
			US$0.001
			
		

 


The product is classified as Excluded Investment Product (EIP) as defined in the Notice on the Sale of Investment Products issued by the Authority.  SGX investor classification: Investors who invest in this product expect low to moderate likelihood of loss of principal investment amount, with generally smaller potential returns. Investors who invest in this product have a basic understanding of financial instruments with standardized terms and no unusual or complicated features. 
 

Investing in ETFs

ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets.  
Each ETF gives investors access to the performance of the asset that comprises the underlying index. Investing in the ETF is also less costly if one was to build a similar portfolio by buying the individual stocks. It also provides exposure to international markets and asset classes that may be inaccessible to individual investors.  
To find out more about ETFs, click here. 



Ride on the Growth of China’s Largest Tech Companies

China

Kingdee International Software Group Company Limited, through its subsidiaries, develops and sells enterprise management software, e-commerce application software and middleware software.  The Company also provides internet-based services and setting up e-commerce platforms for enterprises. In addition, Kingdee provides solution consulting and technical support services.

Kingdee International Software (268 HK)

Ride on the Growth of China’s Largest Tech Companies

The Lion-OCBC Securities Hang Seng TECH ETF will commence trading on SGX on 10 December 2020, offering investors low cost and direct access to...

Singapore Exchange Ltd (SGX)