According to Singapore Exchange Limited (SGX: S68), retail investor interest in ETFs has quadrupled in the first 11 months of 2020 as more people sign up for ETF investing platforms such as blue-chip investment plans and robo-advisors.
But there has been a lack of ETFs that allow investors to only purchase the biggest technology companies in the world.
The Lion-OCBC Securities Hang Seng TECH ETF is the first ETF listed in Singapore that tracks a major technology index.
This ETF provides an exciting new option for investors interested in investing in the biggest Asian technology stocks, but lack the time to monitor the stocks individually.
To get acquainted with this ETF, here is an introduction to its top five components.
Sunny Optical Technology (Group) Co. Ltd (HKG: 2382)
Sunny Optical is one of the leaders in integrated optical device manufacturing and design.
Some of its products include smartphone camera modules, surveying instruments, microscopes and optical lens sets.
These products are sold to a range of well-known brands, including Olympus (TYO: 7733), Sony (TYO: 6758) and Xiaomi (HKG: 1810).
Headquartered in Zhejiang, China, the company listed on the Hong Kong Stock Exchange in 2007 and joined the Hang Seng Index (HKG: ^HSI) in 2017.
Despite the challenges posed by the COVID-19 pandemic, the company managed to post a stellar set of results in the first half of 2020 (1H 2020).
Revenue in 1H 2020 climbed by 21.1% year on year, with all three product segments posting increased year on year revenue.
There has been talk of Sunny Optical becoming the lens module supplier for tech-giant Apple’s (NASDAQ: AAPL) 2021 iPhone models. If this comes to pass, it could be a strong growth driver for the lens maker.
Alibaba Group Holdings Ltd (HKG: 9988)
Founded in 1999 by a group led by Jack Ma, Alibaba has grown to be a titan of the Chinese technology landscape.
The Chinese tech giant operates major brands such as e-commerce giants Taobao and Lazada, video platform Youku, and leading logistics provider Cainiao Network.
It also counts fintech giant Ant Group under its stable of businesses.
In 2014, Alibaba’s initial public offering (IPO) raised US$25 billion, valuing the company at US$231 billion and making it the then-largest IPO in history.
The company has grown from strength to strength since and is now valued at over US$700 billion.
In its latest quarterly earnings report, the group reported a year on year revenue growth of 30%.
More impressively, nine out of its 10 sub-segments posted double-digit growth.
Although the Ant Group IPO was scuppered, the strong growth of Alibaba’s other business segments makes it an exciting stock to watch within the Hang Seng Tech Index.
Tencent Holdings Ltd (HKG: 0700)
Tencent Holdings is a technology conglomerate holding company based in Shenzhen, China.
Among its brands are the social platform WeChat, instant messaging service QQ, and FinTech services like WeChat Pay, QQ Wallet and Tencent Blockchain.
WeChat is the most widely used app in China, boasting over 1.2 billion monthly active users as of March 2020.
The group also owns a suite of digital entertainment providers, including games, news, sports, and music entertainment.
Tencent’s posted impressive growth in 2020, with gross profit for the first nine months of the year climbing 34% compared to the same period in 2019.
In particular, its online gaming segment brought in revenues of RMB41 billion, a year on year growth of 45%.
But the conglomerate is not resting on its laurels, and recently announced a US$1.3 billion acquisition of Leyou Technologies Holdings (HKG: 1089), which owns several successful game development studios.
The acquisition should prove to be a tremendous addition to Tencent’s fast-growing gaming segment.
Meituan Dianping (HKG: 3690)
Meituan is China’s leading e-commerce platform for services.
It offers services in over 200 categories, including car-hailing, bike-sharing, travel bookings and catering.
Meituan’s customer base grew to record levels in 2020, with 476.5 million transacting users in the 12 months ended 30 September 2020.
The pandemic has also brought strong tailwinds for Meituan’s food delivery business.
The segment accounted for 58% of the group’s revenue in the third quarter, growing by 32.8% year on year.
Meituan’s outstanding performance in 2020 has helped boost its share price, which has surged 169% in 2020 alone.
Alibaba Health Information Technology Ltd (HKG: 0241)
Rounding up the top five is Alibaba Health, or AliHealth, the flagship healthcare arm of Alibaba Group.
AliHealth offers innovative healthcare and pharmaceutical products and services in Hong Kong and China.
The COVID-19 pandemic dramatically boosted demand for online medical services, with many people forced to purchase drugs and attend medical consultations online.
Boosted by the change in consumer habits, AliHealth reported gross profit of RMB1.86 billion for the six-month period ending 30 September 2020, an 80.3% year on year growth.
The group also added almost 10,000 professional doctors to its various online healthcare services, boosting its service capacity to meet increased demand.
It also launched an app to provide users with a convenient one-stop-shop for online medical services.
AliHealth is also working with governments and hospitals to promote and construct digital infrastructure for the medical industry.
The group’s impressive growth and ambitious plans leave it poised to be a juggernaut in cloud-based medical services for years to come.
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Disclosure: Herman Ng does not own shares in any of the companies mentioned.