Tired of trying to manage your U.S. tech allocation amid a higher for longer rate regime? It may be time to take profits out of U.S. tech and move into a China tech ETF. While the country has seen some economic tumult over the last several months, tech has recently shone as a bright spot. What’s more, such a move could add some helpful diversification to an overall portfolio at a time when the U.S. itself looks more complicated.
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The Hang Seng TECH Index has returned 5.5% YTD. That stealth China tech rally has occurred despite the Chinese housing market debt outlook causing a significant lag in the overall economy.
The Chinese government may yet enact even more macroeconomic support to address that lag, as well. Further economic stimulus on top of previously announced efforts could provide an even bigger push for tech. With Chinese equities perhaps cheap relative to U.S. equities right now, getting into tech equities amid the rally could appeal, especially as a source of diversification on top of growth.
A China tech ETF, then, could appeal as an option given those circumstances. The KraneShares Hang Seng TECH Index ETF (KTEC) offers one option. KTEC charges 69 basis points (bps) for exposure to the Hang Seng Tech Index. That index caps individual securities at 8%. KTEC holds well-known China tech names like Meituan (MPNGY) but also lesser-known names like Bilibili (BILI).
KTEC has returned 23.4% over the last three months. Its price has risen over both its 50 and 200-day Simple Moving Averages (SMAs) per YCharts. That speaks to its rising momentum overall. Given the overall tech rally and potential further economic stimulus, KTEC could stand out among options for exposure to China.
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