2021 was a roller coaster year for Hong Kong equities. This is reflected in the performance of exchange traded funds (ETFs) – usually passive products that track an index. The top (and bottom) performers reflect the prevailing trends in the overall market.
Oil was one area that outperformed. The pickup in crude oil demand globally has been pushing prices higher. Benchmark Brent crude edged up to nearly seven-year highs. All this meant that in Hong Kong, at the top of the ETF performance list we have two commodity ETFs: Samsung S&P GSCI Crude Oil ER Ftus ETF, with a 53.65% return, and Global X S&P Crude Oil Fut Enh ER ETF with a 46.07% return.
After the two oil futures trackers, it is equity trackers that complete our top 10 list, with mixed sub-categories. The Governments’ decarbonization pledge, and investors’ greater attention to climate issues, brought renewable energy and relevant enablers into light. Companies in electric vehicles, clean energy and relevant components enjoyed another year of a sturdy rally. In the list of the top ETFs in Hong Kong, Global X took two more spots from its thematic equity fleet. Their ETFs, Global X China Electric Vehicle ETF and Global X China Clean Energy ETF, invest in trends that are tightly linked to the anticipated demand growth in renewable energy and advanced technology.
Also, the U.S. markets continued the robust performance from 2020 and hit new record highs several times this year. Two strategies tracking the Nasdaq index also made to the list. They are: iShares NASDAQ 100 ETF (9834) and ChinaAMC NASDAQ 100 ETF (3086) – both earning a Morningstar Quantitative Rating of Bronze –both ended the period with around 20% return. Vietnam equities also enjoyed a strong rally, reflected in the performance of products managed by Xtrackers and Premia Partners.
Bottom Performers
The weakest ETFs this year were the ones following a China-focused—especially technology-heavy—index. Four of the worst ETFs track the Hang Seng Tech Index, which slid more than 30% year-to-date. The index, launched in July 2020, tracks the 30 largest technology companies in Hong Kong. As of November 2021, the top holdings include JD.com (09618), Sunny Optical (02382), Meituan (03690), and Tencent (00700). Global X China Cloud Computing ETF (9826) is the second-worst performer
However, the worst performer was Samsung CSI China Dragon Internet ETF (2812), which dipped 42.4% year-to-date. The tracker invests in the CSI Global China Internet Index, which notably has heavy bets in Alibaba (BABA), Meituan and Tencent, with each taking 15% of index weight as of Dec 20, 2021.
ETFs mimicking the broad-based MSCI China Index, including iShares Core MSCI China ETF (2801) and Global X MSCI China ETF (3040) also made to the list, all ending the year more than 24% lower.
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