The Hang Seng Index has a history of 51 years, and Alibaba Group, Xiaomi Corporation, and Wuxi Biological Products Co., Ltd. are included as constituent stocks. This undoubtedly increases the weight of “new economy” technology companies in the index.
The HSI’s review report in August this year pointed out that since the last reorganization in March 2019, “the Hong Kong stock market has undergone great changes…the overall market structure has begun to change, which has created more room for the rise of the new economic sector. “.
According to the report, those “sizable new entrants” such as unicorn companies, private companies valued at more than US$1 billion (approximately 6.8 billion yuan), and Chinese companies listed overseas have all been listed since March 2019. Has been listed, or is planning to list in Hong Kong. According to the report, the inclusion of these three mainland technology companies is to ensure that the Hang Seng Index “remains the most representative and reliable barometer of the Hong Kong market.”
The Hang Seng Index also launched the Hang Seng Tech Index (Hang Seng Tech Index) specifically for technology stocks at the end of July, which also means that the influence of technology companies on the Hong Kong trading market is becoming more and more important. In addition to Alibaba and Xiaomi, the largest companies in the Hang Seng Technology Index are other technology giants from the mainland, such as the shopping platform Meituan Dianping and gaming giant Tencent Holdings.
The inclusion of Alibaba and Xiaomi in the HSI will continue to increase the attractiveness of the Hong Kong trading market to large technology companies. The increasingly severe regulatory environment in the United States has prompted several mainland Chinese companies listed in the United States to seek a secondary listing in Hong Kong. Affected by this, the world’s most valuable unicorn companies such as Ant Group may also abandon their plans to list in the United States.
When the three mainland companies were included on Monday, the Hang Seng Index also excluded Want Want China Holdings Limited, Shenhua Energy, and Sino Land.
In addition, Alibaba and Xiaomi became the first companies to have weighted voting rights to join the HSI.
A report issued by Jefferies Group on September 6 mentioned that in April 2018, the Hong Kong stock market reform allowed companies with weighted voting rights to be listed in Hong Kong. 99 technology, IT, and biotechnology companies issued new shares, accounting for 23% of Hong Kong’s total market value.
According to the report, Xiaomi and Alibaba were included in the HSI because of the impact of stock market reforms and the possible shock caused by a large number of companies’ secondary listings in the United States.
“We are still optimistic about the Hang Seng Index.” The report pointed out, “With the addition of Xiaomi and Alibaba, the Hang Seng Index has begun to reflect some changes… In our opinion, as more companies go public, the index may continue to expand. “
Following its listing on the New York Stock Exchange in 2014, Alibaba went public in Hong Kong in November 2019; it was also the first HSI constituent stock to be listed on the Hong Kong Stock Exchange. Xiaomi and Wuxi Biotechnology Co., Ltd. were listed in Hong Kong in July 2018 and June 2017, respectively.