Part 8/9:
Investing in Chinese tech stocks involves balancing potential high returns with notable risks. High valuations, market volatility, and regulatory uncertainties mean investors must be prepared for sharp price swings. The sector tends to be more volatile than traditional cyclical or defensive stocks.
To mitigate risks, many investors prefer diversified exposure via exchange-traded funds (ETFs) that track the Hang Seng Tech Index, such as the iShares Hang Seng Tech ETF and Hang Seng Tech Index ETF by Hang Seng Investment in Singapore. These ETFs reduce company-specific risk and provide a more stable investment vehicle. However, given the sector’s lofty valuations, some analysts caution against indiscriminate buying, favoring active stock picking to identify undervalued opportunities.