Key facts
- Hang Seng Indexes Company will add 10 fast-growing companies to its technology index.
- New constituents must have at least HK$500 million in annual sales for the two most recent financial years.
- The Hang Seng TECH Index will expand to 50 constituents.
- Revisions include expanding technology theme coverage and introducing a two-stream selection mechanism.
- The changes will be implemented in the index review for the period ended September and take effect on December 7.
Hong Kong's stock index compiler, Hang Seng Indexes Company, is set to overhaul its technology-focused benchmark by adding 10 fast-growing companies. This move aims to revitalize the index, which has lagged behind global peers and missed out on gains driven by artificial intelligence.
The revisions, which will take effect on December 7, include expanding the number of constituents from 30 to 50 and broadening the coverage of technology themes. The company received support from over 80 percent of respondents in a market consultation for these changes.
Under the new methodology, eligible companies must have at least HK$500 million (US$64 million) in annual sales for the two most recent consecutive financial years. The index will be adjusted using a two-stream constituent selection mechanism, with the top 40 stocks chosen by market capitalization and the remaining 10 by revenue growth over the past 12 months.
Daniel Wong, head of product management, stated that the revisions are expected to increase market capitalization coverage from 85.3 percent to 91.3 percent, and the median revenue growth rate of constituent stocks will rise from 13.8 percent to 21.3 percent. The company also aims to maintain the index's assets under management at US$37.1 billion (HK$289.4 billion).