
The financial sector plays an important
role in any economy, being highly interconnected with everyone having at least
one relationship with a financial institution be it for transaction, loans or
insurance.
Global Financials
2020 may have been a year to forget for financial stocks, but we believe that the stars are aligning in favour of the Global Financials sector, from both a top-down and bottom-up perspective, making this sector an attractive space for investors to be in.
At ETFestival 2021 held on the 15th of May, Ferlyn covered the topic of global financials and shared five key catalysts that we believe will drive the earnings of global financials and their share prices.
The first is the full resumption of capital distribution programs across the banks. Second, the fall in loan loss provisions. Third, a potentially earlier than expected rate hike. Fourth, a recovery in insurance premiums and finally, healthy growth in global AUM (assets under management) within the wealth management industry.
Watch Ferlyn’s presentation as she elaborates on these points in Global Financials - The City that Never Sleeps here.
China Financials
In this presentation concerning the China Financials, Ferlyn explains why the sector is an even more attractive space from a total potential return perspective vs it’s global peers.
In this presentation, she explains how China's financial sector is largely dominated by two industries, the banking industry and the insurance companies – and each of the unique forces that are driving growth in these areas.
Take for instance, while China’s big four banks have consistently traded at a much lower valuation as compared to their international peers for last five years, owing to a lack of research coverage and a lack of market transparency in China as well as a lack of diversified revenue stream. However as China commits to open up his financial market we believe that this valuation gap could start to narrow.
Meanwhile, the Chinese Insurance industry is the 2nd largest in the world, but with room to grow thanks to
1. A growing ageing population
2. Rising middle class population
3. Low insurance penetration rates in China
To what extent will this impact the Chinese Insurance industry and what other catalysts are behind Chinese Financials? Be sure to catch Ferlyn’s presentation here.
Invest
To invest in the Global Financials sector, you can consider the iShares Global Financials ETF (NYSE.IXG).
Our recommended ETF for the Chinese Financials sector is the Global X MSCI China Financials ETF (NYSE:CHIX).
To gain exposure specifically to the Chinese banking industry, our recommended etf is the BMO Hong Kong Banks ETF (HKEX: 3143).
All 3 of these ETFs are also available for subscription on our ETF RSP service, which allows you to invest a regular sum on a monthly basis starting from just US$50 (or HKD50 in the case of the Hong Kong Banks ETF) a month.
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ETF |
RSP |
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Global Financials |
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China Financials |
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Chinese Banks |
ETF RSP Promotion
From now till 8 December 2021, investors can enjoy a 0% processing fee when they transact ETFs through a Regular Savings Plan (RSP) from a list of over 60 ETFs. And for a limited time from now till 31 May 2021, you can enjoy 2 free trades when you invest in FSMOne’s new 2021 ETF Focus List!
Read more about the 0% processing fee for RSPs promotion here.
Find out which are the best-in-class ETFs to invest in this year through our ETF Focus List 2021.
