Hong Kong Stock Exchange’s Hang Seng Index expanded the list of companies
The main index of the Hong Kong Stock Exchange will soon be calculated using a different algorithm. These changes will allow large Chinese corporations, including Alibaba Group, to be included in Hang Seng.
According to the new rules, now the index of the exchange may include companies whose portfolio includes shares with unequal voting rights, and those that have listed on any trading floor. The changes were adopted in August last year, and in September in Hang Seng entered new corporations registered in China. According to experts, at first the new participants of the index will occupy a share of no more than 5%, but over time the ratio may change. Everything depends on the market and its reaction to innovations.
It should be noted that Hong Kong Exchanges and Clearing Ltd has been trying to attract large technology corporations from China and biotechnology companies for several years. The site has taken various steps that would allow it to represent influential enterprises of the neighboring country. For example, in 2018, the exchange allowed for the IPO of companies that have securities of different classes. Earlier this ban made it impossible for Alibaba to make a public offering in Hong Kong, so the technology giant held it in New York back in 2010. After easing the rules Alibaba carried out an IPO on Hong Kong Exchanges, resulting in an estimated $13 billion.
The competitor of the corporation is JD.com Inc, whose shares were also sold in New York. Last year, however, it applied to the Hong Kong Stock Exchange for a secondary offering. In addition to these companies, this trading floor features securities of technology and mobile device manufacturer Xiaomi, Meituan Dianping platform, which provides a variety of Internet services. All of them were able to trade on Hong Kong Exchanges after the ban was lifted, which was valid for a long time and slowed down the development of the exchange.
Now a new perspective is the expansion of the Hang Seng index, which has existed for over 50 years. According to experts, these changes will give an opportunity to attract large companies to the exchange. Hang Seng includes representatives of the so-called “old economy”: banking and insurance institutions, developers. However, the market is changing and now it is optimal for the index to show the situation in the country on the example of areas with higher value added. The fact that Hang Seng needs modernization is also proved by statistics – since the beginning of this year it has decreased by 15%. Therefore, reformation of the instrument is extremely necessary.