HEAD-TO-HEAD: FSSA versus Schroders

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Isaac Poole, Oreana Portfolio Advisory Service

Introduction

The Hong Kong stock market has struggled this year, as share prices have been dragged down by the regulatory clampdown on China tech companies listed in the territory, the defaults of Chinese property companies, and uncertainty about Hong Kong’s future.

The MSCI Hong Kong index is down 1.37% for the year to 10 December, which looks relatively robust compared with the 17.90% slump by the MSCI China index. However, it has significantly underperformed the MSCI World index, which has surged 20.02%, according to FE Fundinfo.

Meanwhile, new stock listings in Hong Kong have declined 10% this year, making it an outlier among global markets as anxieties continue over the outlook for China’s tech sector after Beijing acted against offshore share sales. In comparison, global IPO fundraising has jumped 75% from last year’s total, with New York listings especially robust.

Recently, however, ride-hailing firm Didi said it would delist from New York, and plans to go public in Hong Kong instead. Optimists might hope that if the deal were to ahead, it might be the harbinger of a resurgence of China tech listings in the territory.

Isaac Poole, global chief investment officer at Oreana Portfolio Advisory Service, has been positive on Hong Kong stocks for the last couple of months, attracted by what he estimates as the market’s 20% to 40% undervaluation.

Against this background, FSA asked him to select two Hong Kong equity products for comparison: the FSSA Hong Kong Growth Fund and the Schroders ISF Hong Kong Equity Fund.

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