Starting my foray into Hong Kong Stock Exchange






As the post title suggests, I will be starting my foray into the Hong Kong Stock Exchange.

My wife has a lump sum of Hong Kong dollars during her two-year work stint in Hong Kong. I realized that there is 0% interest for Hong Kong Dollar deposits or any financial instruments. The money has been lying there for a couple of years! And she agreed for me to help her manage it.

Investment objective
My wife mentioned that the investment objective is capital preservation. She had already lost quite a lot due to forex rate and inflation. She was earning Hong Kong dollar when it was HKD5+ to SGD1 and now its HKD6+ to SGD1!

Investment approach
In terms of tools, I am going to use my SCB online equity trading account to invest in the Hong Kong Stock Exchange. The reason why I choose this is because I already have an SCB online equity trading account and the commission rate is one of the lowest around. I’ve read a little about Interactive Brokers which also have competitive rates, but it will be too much of a hassle to open a new account on a different platform.

Since my wife wanted to preserve capital, I think the HK REITs will be a good starting point. From my research, Hong Kong does not have capital gains tax and there is no withholding tax for dividends repatriated to Singapore.

There are currently 11 HK REITS
Champion Real Estate Investment Trust 2778:HKG
Fortune Real Estate Investment Trust 778:HKG (In case you’re wondering, its the same Fortune REIT on SGX as its dual-listed on HKSE & SGX)
Hui Xian Real Estate Investment Trust 87001:HKG
Link Real Estate Investment Trust 823:HKG
New Century Real Estate Investment Trust 1275:HKG
Prosperity Real Estate Investment Trust 808:HKG
Regal Real Estate Investment Trust 1881:HKG
Rreef China Commercial Trust 625:HKG
Spring Real Estate Investment Trust 1426:HKG
Sunlight Real Estate Investment Trust 435:HKG
Yuexiu Real Estate Investment Trust 405:HKG

I have done a brief scan of the property portfolio of the 11 HK REITs and two REITs stood out for me:

Champion Real Estate Investment Trust (2778:HKG)
Amongst the various types of REIT, I particular like Grade A office REITs and industry space REITs. Champion REIT has a portfolio of 2.85 million square feet of prime office and retail floor area by way of two properties in Hong Kong, Citibank Plaza and Langham Place, one on each side of the Victoria Harbour.  I quite like these two properties.  Quantitative wise, Champion REIT has a Price/Book value of 0.45 and dividend yield (ttm) of  5.83%, which is pretty decent.  Sounds like a “champion” to me! (pun intended!!)

Link Real Estate Investment Trust 823:HKG
Link REIT’s portfolio consists of properties with an internal floor area of approximately 11 million square feet of retail space and approximately 80,000 car park spaces. Other than the huge GFA, why LINK REIT stood out is because I’ve not really seen ‘car park spaces’ specifically mentioned inside the portfolio of a REIT.  From what I was told car park lots in Hong Kong is expensive. Link REIT has a Price/Book value of 1.03 and dividend yield (ttm) of 3.85%. From the first look, it may seem its fairly priced right now. But it will be interesting to research further into the REIT’s operations.

That’s all for now. I will be focusing some time on Hong Kong stocks. I will greatly appreciate any pointers that any experts in the comments below!