How to Increase Return on Your Hong Kong Stock Portfolio

What are the catalysts for supporting the Hang Seng Index?

As what we have discussed in ourrecent Saxo Article, several points support the Hang Seng Index. The reduction of dividend tax for mainland investors in Hong Kong stocks which supports high-dividend stocks in particular Chinese banks, Telecoms, and energy companies as well as Hong Kong exchange and Chinese Securities firms. 

The Export growth of China has rebounded significantly in April. The rebound has been contributed by selling more intermediate goods to ASEAN countries and India and also China CPI inflation picked up to 0.3% y/y in April. It is driven by increases in service prices particularly in tourism-related spending, air tickets, rental vehicles, and hotel prices.

In one of our more recent article Hong Kong Equity rally surpasses global Markets. The Low valuation relative to other financial markets, underweight position, and strong performance in large-cap China tech, healthcare, property, and insurance stocks have also attracted investors to the Hong Kong Markets. 

What should you do to capitalize your existing Hong Kong stocks portfolio?

Investors who have invested in the Hong Kong stock market in their existing portfolio and still have a positive view of the current trends see the recent retracement as an opportunity to invest more. However, the limited access to capital restricts investors from capturing such opportunities. One of the tools to help our investors is using Margin Lending. 

What is Margin Lending?

Margin lending allows our investors to use their existing securities as collateral to enhance their buying power to buy more in stocks and ETF beyond the value of the cash and/or securities on their account. It works as a loan or credit facility and the amount investors can borrow depends on their financial situation and the collateral value. 

The total amount investors can borrow depends on the securities in their portfolio, each security is assigned a risk rating that determines the number of times you can leverage. Out of 82 stocks in the Hang Seng Index, there are 74 stocks, more than 90% of the stocks you can leverage more than 3 times.