A new index focused on China’s technology giants is set to give investors greater access to their growing dominance in Hong Kong’s market.
The Hang Seng Tech Index, which yesterday launched with backdated prices, tracks the 30 largest tech companies listed in the territory, including Tencent Holdings Ltd (騰訊), Alibaba Group Holding Ltd (阿里巴巴), Meituan Dianping (美團點評) and Xiaomi Corp (小米).
Tracking the gauge this year would have returned 44 percent for investors, versus a loss of 13 percent for the Hang Seng Index.
The tech measure fell 1.3 percent yesterday.
The move comes at a time when further listings of Chinese technology firms are in the pipeline, such as Jack Ma’s (馬雲) Ant Group (螞蟻集團), following those of NetEase Inc (網易) and JD.com Inc (京東).
Listing closer to home has become more attractive as tensions between Washington and Beijing threaten to curtail Chinese companies’ access to US capital markets.
The compiler of the Hang Seng Index has already embraced change through moves such as scrapping a weighting limit for dual-class shares on some of its gauges.
The tech index is seen helping investors bridge a gap between a Hong Kong benchmark overstuffed with old economy banks and insurers, and the technology companies that have emerged as big winners in the territory’s beaten-down market.
“There are too many laggards in the Hang Seng Index,” said Castor Pang (彭偉新), head of research at Core Pacific-Yamaichi International Hong Kong (京華山一). “With overseas-listed Chinese firms deciding to list closer-to-home, the Hong Kong market falls short in terms of having a representative index for these stocks. This new index serves to fill this gap and drive capital flows.”
Supported by strong mainland inflows through stock connect links, Chinese technology shares have emerged as big winners in Hong Kong this year. Tencent has surged 38 percent, while Meituan is up 82 percent.
The Hang Seng Index, on the other hand, has underperformed. Nearly half of its members have fallen at least 20 percent this year.
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