Nasdaq-style benchmark to track tech firms on way

Business | Stella Zhai 10 Jul 2020

Hang Seng Indexes Company is planning to launch a Nasdaq Composite Index-like benchmark to track tech firms, while shares of Alibaba (9988) surged 10 percent on hopes that it could be included in the Hang Seng Index next month and on rumors that its fintech affiliate Ant Group is seeking to list in Hong Kong.

Daniel Wong, director and head of research and analytics at HSI Company, predicted that more tech firms would list in Hong Kong and there would be bigger demand in the sector.

He emphasized the target of making a new tech-themed index is not to replace the benchmark HSI, and it would not overlap or compete with other indexes such as the Hang Seng SCHK New Economy Index and Hang Seng China New Economy Index.

Shares of Alibaba hit HK$263.80 before paring the gains, closing at a record HK$261.60 yesterday. This came after Reuters reported Ant Group is considering a Hong Kong initial public offering this year at the earliest, with a targeted valuation of HK$200 billion (HK$1.56 trillion).

Wong said that Alibaba, Meituan Dianping (3690) and Xiaomi (1810) could be included in the scope of stocks eligible for the Hang Seng Index in an August index review.

In general, companies have to be listed on the Hong Kong stock exchange for at least two years before being eligible for HSI inclusion, but it could be shortened if a company's market cap is big enough, he said.

However, NetEase (9999) and (9618) will not be covered in the upcoming review as they made market debuts only last month.

Mainland tech giants continued to outperform yesterday, with Meituan Dianping climbing 5.01 percent higher to HK$209.80. Xiaomi rose 4.6 percent to HK$16.84.

Ian Charles Stone, an independent non-executive director of Tencent (0700), sold 20,000 shares in the company for a total of HK$10.57 million last week, data from the stock exchange showed. The heavyweight closed 3.68 percent higher at HK$563.

Mainland stocks extended a winning streak into an eighth session yesterday despite regulators warning of market risks. The SSE Composite Index was up 1.39 percent while the Hang Seng Index was little changed at 26,210 points.

Local developers and casino operators fell as cases of Covid-19 infections grew in Hong Kong.

Wharf Real Estate Investment (1997) slid 3.61 percent to HK$33.40, the worst performer among blue chips. Galaxy Entertainment (0027) fell 2.09 percent to HK$51.55. Hong Kong Exchanges and Clearing (0388) rose 3.52 percent to its highest HK$370.60.

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