Hong Kong’s Hang Seng index is set for the first big shake-up in its half century existence. The 50-odd constituent stocks will swell to 80 by mid-2022, encompassing more mainland Chinese companies. Ultimately the benchmark will track 100 stocks.
About time. The existing HSI represents half the market by capitalisation and not much more in terms of turnover. It needs to become more representative.
The index is heavy on financials at a time when the territory’s role as financial centre is being undermined by a draconian national security law. Old-timers are also prominent. Half the constituents have been listed for more than 20 years. That, give or take, is the entire age of tech stars like Google, Facebook, Alibaba or Tencent. Another quarter have spent more than 15 years on public markets.