AN index launched a year ago to give investors greater exposure to China’s Internet giants is now the world’s worst-performing major technology gauge.

The Hang Seng Tech Index has been on a roller-coaster ride in the last 12 months. The gauge, which marks its one-year anniversary Tuesday last week, was up 59 percent at its February peak but has since seen more than US$551 billion in market value wiped out.

That has reduced the gain to nearly 6 percent, compared with more than 40 percent for the MSCI World Information Technology Index and the NASDAQ-100 Index. The measure also lags onshore peers: the ChiNext Index is up 35 percent in the period.

Global investors sold China’s Internet giants after China took actions to rein in the nation’s tech firms. Bank of America Corp. strategists wrote in a note that the regulatory overhang is unlikely to dissipate anytime soon, instead recommending investors rotate into tech firms outside of China.

Launched last year, the gauge tracks the 30 biggest Hong Kong-listed tech firms including giants like Tencent Holdings Ltd., Alibaba Group Holding Ltd. and Meituan. It was set in motion at a time when Chinese tech companies were looking to list closer to home as growing tensions between the United States and China threatened to curtail access to U.S. capital markets.

The index took a fresh beating this month, down 11 percent. While the forward price-to-earnings ratio for the Hang Seng Tech Index has slumped from a February peak, it is still trading at about 35 times estimated profits, compared with 28 times for the Nasdaq-100 Index and 43 times for the ChiNext.

That hasn’t deterred some. Hong Kong’s two most popular exchange-traded funds (ETFs) this year are those tracking the tech gauge. The combined total assets of all such ETFs have more than doubled in size this year to US$3.8 billion and the pace of investment into the products has accelerated since mid-May.

“Some long-term institutions may have started buying these Hang Seng tech ETFs. It seems that the more the index falls, the more ETFs they will buy,” said Alvin Ngan, analyst at Zhongtai Financial International Ltd.

While some see the uncertainty created by the ongoing crackdown as a buying opportunity, others remain wary amid questions over its duration and where it may head next. (SD-Agencies)