OCBC Wing Hang

All's well that ends well. Some months ago rumours had it that the Agricultural Bank of China was bidding for the controlling stake in Wing Hang Bank. OCBC has since emerged as the winner. These days, the state-owned banks in Hong Kong embrace the freedom of assembly by encouraging their staff members to turn up at the "anti-occupy Central march". The last thing this city needs is another big PRC bank.

OCBC Bank has a branch in London at Rex Building in the City which offers mortgage loans for property investments in London. I would love to see more competition with Bank of East Asia, HSBC and Shanghai Commercial Bank, which are apparently the the only lenders which offer UK mortgage loans to their Hong Kong customers.

On 18 August, Wing Hang announced that its name would change to OCBC Wing Hang with effect from 1 October. A happy coincidence.

Diversify by Investing in Hang Seng Index

I have been accumulating iShares MSCI China Index ETF for a year or two. While I have wanted to diversify by investing in shares in British companies, the P/E ratio of the Vanguard Developed Europe Index ETF (20.0x) suggests that I should be patient at this time.

The need to diversify remains and on second thought investing in the Hang Seng Index may help a bit. No doubt there is duplication between MSCI China Index and Hang Seng Index (the usual suspects include Tencent, China Mobile, CCB, ICBC and BOC). Yet the following constituents of Hang Seng Index makes it different:-

Finance

HSBC, AIA, HKEX, Hang Seng Bank, Bank of China (Hong Kong) and Bank of East Asia

Utilities

CLP, Hong Kong and China Gas and Power Assets

Properties

Cheung Kong, Sun Hung Kai Properties, Wharf, Hang Lung Properties, Henderson Land, New World Development and Sino Land

Commerce and Industry

Hutchinson, Galaxy Entertainment, Sands China, Swire Pacific, Li & Fung, MTR and Cathay Pacific

Hang Seng Index will bring opportunities to invest in Hong Kong, Macao (through Galaxy and Sands), Asia (AIA) and even the UK (HSBC and Hutchinson). In 2013, 17% of revenue of Hutchinson was generated in the UK (compared with 15% in Hong Kong, 14% in Canada and 12% in China); 23% of EBITDA from the UK, again more than any other countries.

Time to do some math. As at 15 August:-
The price for three board lots (or 600 units) of 2801:HK was $13,200 whereas one board lot (or 500 units) of 2800:HK was $12,875.