Tuesday, June 11, 2019

HK investing Thoughts

I have always thought about investing in Hong Kong shares as a form of diversification out of Singapore. Furthermore, this could increase my pool of opportunities to buy undervalued stocks since the population of choices is increased (perhaps by a lot of times) since HK market capitalization greatly exceeds that of SG.

Source: Pexels Free Stock Photos

Let me start with a disclaimer that I am not paid in any way for my post, these are purely my thoughts.

During my travels, I have been using the DBS Multicurrency Account (DBS MCA) and I realize that by creating a Hong Kong Dollar (HKD) wallet, I am able to convert SGD into HKD and buy stocks directly.

A quick check at DBS website tells me that the rate I am offered is 1 HKD for 0.1762 SGD, or 1 SGD = 5.675 HKD.
Source: DBS Exchange Rate Website

I then log on to my DBS ibanking (this is an example).
Source: My own DBS ibanking portal

Do note the deviation from the market rate and whether it is a comfortable deviation. For example:

Source: Yahoo Finance (SGDHKD)

Presuming I am investing SGD 10,000 which will equate into HKD 56,750.


So why am I talking about all of these? There is a HK stock which currently interests me, Bank of China. It is currently trading at 3.26 HKD but its NAV is 6.205 which suggests undervaluation. 52-week low is also at 3.19 which further supports this premise. Dividend payout is according to 6.2% and all statistics are from InvestingNote.

This is just a preliminary look for me and I think some of the risks here is firstly: the controversial extradition bill which caused a rally of 1 million people in the streets here. The loss of investor confidence in HK markets might be bearish for stocks and is something worth looking at. Secondly, if HKD depreciates against SGD, there will be a reduced profit. Since HKD is pegged to USD and there have been rumors of rate cuts, we might expect further depreciation of USD and similarly HKD.

These are my current thoughts now but always happy to hear new ideas about how you will invest in the HK market.

7 comments:

  1. Very interesting. How do you manage to locate the data - NAV is 6.205?

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    1. hello, the stock data is available on InvestingNote

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  2. I think the exchange rate would be better if its on interactive brokers. with regards to the foreign currency depreciation and appreciations they are more than likely to be difficult to predict. The main reason for purchase should still be because the stock is a 'buy'. I would say this main reason would be able to outshine the risk involved. Unless its a planned short term purchase then everything would matter much more.....

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    1. oh thanks for the heads up. yeah that is the main reason whether we should buy, but just wanting to make sure i'm fully covered by considering currency fluctuations too. are you also looking at similar stocks in hk market?

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    2. I do hold some stocks in hk markets but not banks.

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    3. i see. i think i am considering buying one of the china banks in hk soon

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  3. Hi Benjamin

    I also stared dipping my toes into Hong Kong market and is interested in learning from the experiences of those investing in it. Look forward to your next post and good luck!

    ReplyDelete

HK investing Thoughts

I have always thought about investing in Hong Kong shares as a form of diversification out of Singapore. Furthermore, this could increase my...