Shanghai’s answer to Nasdaq outstrips Hong Kong amid Chinese tech frenzy

As the Hang Seng Index compiler prepares to announce the outcome of its latest quarterly review on Friday, there is speculation that more artificial intelligence companies could join the benchmark index to boost its focus on technology. Investment banks, such as China International Capital Corporation, suggest that AI model developers MiniMax Group and Z.ai, known as Zhipu in China, are the leading candidates for inclusion in the 93-member Hang Seng Index.

Zijin Gold International, a unit controlled by bullion producer Zijin Mining Group, is also considered a strong contender for addition to the index. Hong Kong aims to enhance its exposure to AI by increasing the representation of tech companies in the stock benchmark, which has historically lagged behind global peers due to its limited exposure to AI hardware firms.

The information technology sector currently accounts for 15.6% of the Hang Seng Index's weighting, lagging behind financials and consumer discretionary sectors. The index's compiler has also proposed revamping its methodology for selecting members on the Hang Seng Tech Index, aiming to increase the number of constituents from 30 to 50, with companies based on the fastest revenue growth eligible for inclusion.

The Hang Seng Index, established in November 1969 and currently valued at HK$31.3 trillion, represents 67% of Hong Kong's stock market value and over half of its total turnover. The most valuable constituents are HSBC Holdings, Tencent Holdings, and Alibaba Group Holding, each with a significant weighting in the index.