Hang Seng Indexes Company will launch the Hang Seng TECH Index on July 27, tracking the 30 largest technology companies listed in Hong Kong that pass the three layers screening criteria.
Meanwhile, Tencent (0700), Alibaba (9988), Meituan Dianping(3690) and Xiaomi (1810), as the largest 10 stocks in terms of market capitalization will be selected as index constituents
The index covers Hong Kong-listed companies that have high business exposure to selected technology themes, including internet, fintech, cloud, e-commerce, and digital activities.
Eligible candidates are further screened by whether they operate via a technology-enabled platform, their research and development expenses to revenue ratio, and their revenue growth. After this screening, the top 30 stocks in terms of market capitalization will be selected as index constituents.
The upper limit of the proportion of the consistent is eight percent by adopting a free-float-adjusted market capitalization methodology.
The index constituency is reviewed quarterly with a Fast Entry Rule such that sizable newly listed companies with technology themes could be included in the index in a timely manner. The new index is calculated and disseminated in real-time at two-second intervals.
It also provides fast track to initial public offerings to be adopted in the Index, as fast as after 10 trading days.
According to back-testing data, the Hang Seng TECH Index would have achieved significant returns of 36.2 percent and 35.3 percent for the full year of 2019 and the first half of 2020 respectively.
On the same date, the company also announced to include Biotech Companies listed under Chapter 18A of the Stock Exchange of Hong Kong’s Main Board Listing Rules into the universe of the Hang Seng Composite Index, starting from the index review for the quarter ended June 30.
