IT News on October 7th: Hang Seng Indexes Company recently released a summary of market consultations regarding revisions to the compilation methodology of the Hang Seng Tech Index. Overall, the Hang Seng Tech Index will undergo six revisions, focusing on two main directions: expanding the coverage of technology-related themes and introducing a grouping-based stock selection mechanism.
IT Home provides the following details regarding this adjustment of the Hang Seng Tech Index:
I. Expand the coverage of technology topics
Cancel industry requirements
Adopt the revision proposal previously proposed, and cancel the requirement that eligible candidate companies must belong to five specified industries in the Hang Seng Industry Classification System.
Revise six major technology themes
Adopt the revision plan proposed earlier, integrate and expand on existing topics, and add new topics related to cutting-edge technology. The six revised technology topics are: 1. Digital Platforms and Solutions; 2. Artificial Intelligence; 3. Advanced Hardware; 4. Robotics and Automation; 5. Cloud Computing; 6. Cutting-Edge Technology.
The number of technology sub-topics has been increased from 16 to 24.
Adopt the revision proposal put forward earlier to increase the number of technology sub-topics from 16 to 24, in order to align with the revisions of the aforementioned six major technology themes.
II. Introduction of Group Stock Selection Mechanism
Set the stock selection scope to the constituent stocks of the Hang Seng Composite Large and Medium Cap Index.
Adopt the revision proposal previously put forward, and revise the stock selection scope from main board listed companies to the constituent stocks of the Hang Seng Composite Large and Medium Cap Index.
Adopt a dual-group stock selection mechanism
Adjustments have been made based on the revision proposal previously proposed, adopting a dual-group stock selection mechanism that uses market capitalization ranking and revenue growth ranking as the criteria for stock selection. Non-current constituent stocks must also meet the requirement of having an average daily trading volume of at least HK$100 million (Note from IT: The current exchange rate is approximately RMB 85.526 million) over the past three months; constituent stocks selected based on revenue growth ranking must have recorded an annual income of at least HK$500 million (approximately RMB 428 million at the current exchange rate) for the most recent two consecutive fiscal years.
The number of constituent shares has increased from 30 to 50.
Adopt the revision plan proposed earlier, increasing the number of constituent stocks from 30 to 50. Among them, the top 40 will be selected based on market capitalization, and the remaining 10 will be chosen according to revenue growth over the past twelve months.
The aforementioned revisions will be implemented in the index review as of September 30, 2026, and will take effect in the index adjustment in December 2026.
According to IT, the Hang Seng Technology Index was launched on July 27, 2020, and it has been around for 6 years now. It is a flagship index that reflects the overall performance of technology-themed listed companies in the Hong Kong stock market, including Tencent, Alibaba, Meituan, Xiaomi, Baidu, JD.com, Li Auto, NIO, SMIC, and other core Chinese technology companies as well as new energy vehicle manufacturers.
