The Hang Seng Index has modified its rules to include tech giants Alibaba Group Holding Ltd., (NYSE: BABA; HKEX: 9988) Xiaomi Corp. (HKEX: 1810) and Meituan Dianping (HKEX: 3690) on the benchmark.
According to multiple reports today, the move will mitigate the financial dominance on the 50-year-old benchmark, which includes institutions and conglomerates such as Bank of Communications Co., Ltd. (HKEX: 3328), and CK Hutchison Holdings Ltd.
The change comes as 90% of responses from banks, insurers, analysts, brokerage firms, and asset managers were in favor of including the stocks on the HSI. There were a total of 58 respondents. For Alibaba, it’s hasn’t been in too long of a wait, as it has been listed in Hong Kong since the fourth quarter in 2019. With the underwriters exercising their over-allotment option, Alibaba raised nearly $13 billion in Hong Kong.
"This was a move expected when Alibaba did its secondary listing in Hong Kong late last year,"
Hao Hong, the head of research at Bocom International said.
He added, “The index is filled with financial stocks, and including technology stocks marks a better representation of the Chinese economy now. While index funds will have to buy these stocks now, it wouldn't matter to active managers as they should have maximum allocation to these stocks already."
On Friday, data reported by the National Bureau of Statistics showed that new-home prices in China’s 70 major cities rose 0.42% in April. The optimism helped the HSI gain 137.30 points to 23,934.77 at Monday’s close.
Some other tech giants reportedly exploring trading in Hong Kong are JD.com Inc., (Nasdaq: JD and NetEase, Inc. (Nasdaq: NTE) amid the rule change on the HSI.