Hang Seng Index ETF opinions / Overweighting China in your portfolio

Coffee
1

Hi there

Does anybody have an opinion about Hang Seng Index ETFs ? Couldn’t find anything on this Forum on this.

My two cents on this: Pretty sure that China will grow within the next 4-5 years, while the US will go down. Especially because with the new movement of the BRICS states, countering the US Dollar with a new gold backed currency, this could flip the world order.

With that said, how strategic is it to primarily have the major portfolio allocation on typical -
ETFs like VT or VWRL, which primarily focus on the US ?
How many % of the portfolio are suggested to have on specific markets ? Any suggestions ?

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You would have been spectacularly wrong over the last 10-15 years,
The gap in GDP growth considerably narrowed over that timeframe.
Eventually things may turn again though and you may be right.

You didn’t miss that they’re currently writing about a property market crisis in Hong Kong’s papers?

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My two cents on this: Pretty sure that US will grow within the next 4-5 years, while the China will go down.

Now what should we do?

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Maybe also consider geopolitics: https://www.csis.org/analysis/first-battle-next-war-wargaming-chinese-invasion-taiwan

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I don’t get your comments. All these ETFs use a benchmark, i.e. FTSE Global All Cap Index for VT.

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The inclusions/exclusions rules are known: https://research.ftserussell.com/products/downloads/FTSE_Global_Equity_Index_Series.pdf

If China weight increases vs the rest of the world over time, the same will apply to the benchmark and the ETF. The ETF will stick to the market, no less, no more.

If you want to overweight China, that’s a different story. I’m not going to take the risk of guessing how China will evolve in the years to come.
Giving a 1-year weather forecast would be easier :slight_smile:

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A good general rule is: Diversification beats speculation

I would second going with a broader ETF, even one that invests in the Far East as a whole. I don’t know if a global ETF is what you’re looking for though, as growth of China vs. US would likely result in a zero-sum equation with a global ETF, depending on its weighting. Personally, I use separate ETFs for each major region.

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Correct, this was the underlying intention for the question.

Anybody else having an opinion on overweighting China in your portfolio at this point and time ?

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My opinion: I exclude China from my portfolio.

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Could you develop your arguments from the 1st post? For which reasons do you think China will do better than the US in the next 5 years ? Is it the results of personal researches ? Care to share them with us? Or gut feelings?

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And my two cents: Similar considerations in the past. I have been adding two CN ETFs (HSBC ETFS PLC - HSBC Hang Seng Tech UCITS ETF, HSTE.SW and Invesco China Technology ETF, CQQQ) to my watchlist early in 2021 after a strong buy recommmendation by a semi-famous Swiss investment guru (which had/has had a good nose in other cases). My gut couldn’t be conviced. Both titles are approx. -60% now…

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There is an interesting video from Ben Felix on this topic: https://youtu.be/DEV49qY0TP8?t=46

TL;DR: “Economic growth” and “stock market returns” are 2 different things.

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Interesting articles in this weekend Wall Street Journal

Access for subscribers only or for free using PressReader with the help of your public library (mustachian tip of the day :slight_smile: )

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China is not looking good. The economy is collapsing.
Maybe US will prevail once more.