ETF Idea Long-term growth intact despite China’s Big Tech cr | FSMOne SG - Research Highlights

ETF Idea

Long-term growth intact despite China’s Big Tech crackdown

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• A series of regulations on the tech sector has sent many Chinese tech stocks tumbling to their year-to-date lows. We think that the fears of the regulations are overblown and this is a good opportunity for investors to add some China tech exposure to their investment portfolios.

• China has legitimate reasons to regulate the Big Tech companies, as they have grown significantly over the years and wield immense power.

• Moves to rein in Big Tech are not contained in China alone, as the Western countries are also calling for greater regulatory oversight.

• Additionally, the impact of the regulation is uneven and we like companies who demonstrate continued earnings strength.

• The long-term growth story of China’s tech sector remains intact on the back of megatrends, such as rising internet penetration rates and the digitalisation of consumption.

• Investors should use this opportunity to gain exposure to China’s tech sector, through the iShares Hang Seng TECH ETF (HKEX:3067). Our target price for this ETF is HKD 19.40, which represents an upside of approximately 50%.

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: iShares Hang Seng Tech ETF (HKEX:3067)