Hong Kong's Benchmark to Include Alibaba, Xiaomi and Meituan Dianping

The move will offset the financial sector's' dominance on the five-decade-old benchmark.

Anthony Russo
    May 18, 2020 1:00 PM  PT
Hong Kong's Benchmark to Include Alibaba, Xiaomi and Meituan Dianping
author: Anthony Russo   

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 offset the financial sector's 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 decision was prompted by more than 90% of the 58 banks, insurers, analysts, brokerage firms, and asset managers that were consulted, supported the inclusion of these stocks on the HSI. 

Alibaba has been listed in Hong Kong since the fourth quarter of 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 housing market figure 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.