Invast Blog

Hong Kong banks react to Chinese market meltdown

One of the worst performing strategies on our PortfolioSelect platform over the past month has been the Smart Banks Hong Kong strategy. Despite the name, the banks in that part of the world haven’t been smart investments over the past month. The name ‘smart’ refers to the way we make selections and weigh the portfolio strategy. For example the strategy is down 10.5% over the past month but up 5.6% over the past year.

When the market wants risk, the strategy flies high and can be a standout performer. We attribute a risk score of 4 out of 5 for the strategy, among the highest due to volatility. We’ve been writing about the impact of the Australian banks on the domestic market over the past few weeks and thought it important to reiterate some of that caution on the regional banks too. Hong Kong is no exception, many of the banks in this strategy have large exposure into China and the sentiment in Chinese stocks is flowing across the border.

At some point this strategy will start to become attractive – for now we think there is more downside movement. The fall in the Smart Banks Hong Kong strategy is smaller than some other Hong Kong and Chinese related strategies on our platform that suggest that there might be more downside pressure. It’s interesting to note that all of the stocks in this strategy performed poorly during the month, the best performer was HSBC and that in itself was down almost 8% as of the time of writing. We wouldn’t be tempted to touch by the strategy for the time being.

We’ll tell you what is performing strongly in this market and a good way to play the downward spiral on Thursday.

To find our more above Invast’s PortfolioSelect platform – and strategies like Smart Banks Hong Kong– click here.

Best regards,

Invast Investment Committee

These are our initial impressions only, please make sure you always read all disclaimers on this website and individual reports very carefully. The Invast team of advisors are happy to answer any questions you may have, so give us a call today on 1800 468 278 or email support@invast.com.au. Alternatively, use our live chat facility on invast.com.au.

*Past performance is not indicative of future performance. The calculation of the returns is based on the performance of the actual underlying securities, in accordance with the weighting envisaged by the portfolio. These performances exclude financing and commission costs.

 

Featured Portfolios

The Invast PortfolioSelect platform offers a collection of Strategic Investment Portfolios (SIPs). SIPs are professionally researched and constructed portfolios of CFDs over underlying stocks and ETFs, which reflect popular market themes or strategies. You can buy SIPs across local and international stock exchanges in one click.

Smart Banks Hong Kong

Smart Banks Hong Kong

Access Hong Kong banks using smarter weights to improve the risk/return profile of the sector and reduce excessive exposure to the sector’s heavyweights. This portfolio will be executed as a CFD.

Diversified Assets Bearish

Diversified Assets Bearish

A selection of inverse ETFs that short-sell equities and commodities can benefit from a correction in these assets. This portfolio will be executed as a CFD.

To find out more about our Strategic Investment Portfolios and the PortfolioSelect platform, please click here.

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