AAGIY - EWH: Hong Kong Equities Are Not Cheap But Remain Internationally Competitive
- Hong Kong equities are mainly exposed to financial sectors. Therefore, a rise in long-term interest rates are supportive for funds such as EWH.
- EWH offers mainly U.S. investors an opportunity to invest in Hong Kong equities, which include companies like AIA Group Ltd (a major insurance company).
- In terms of overall valuation, EWH is not cheap, with a normalization to the country market risk premium implicating downside potential.
- However, a directional comparison suggests that EWH still offers better value than U.S. stocks, which trade at even greater heights.
- EWH probably still remains a good alternative to U.S. equities, and a good international diversifier. I would be unsurprised if EWH outperformed.
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EWH: Hong Kong Equities Are Not Cheap, But Remain Internationally Competitive