Hong Kong tech index to harness fast-growth companies in bid for better performance

To improve the performance of Hong Kong's technology-focused benchmark, the stock index compiler will introduce 10 fast-growing firms with at least HK$500 million in annual sales. This change aims to revitalize the Hang Seng Tech Index, which has underperformed relative to global peers due to a lack of excitement around AI-driven companies.

The current index, often seen as Hong Kong's equivalent to the Nasdaq, has lost momentum, falling 23% this year. Notably, heavyweight constituents like Tencent Holdings and Meituan have failed to generate investor interest amid the AI frenzy. In contrast, the Nasdaq 100 and the chip-heavy Korea Composite Stock Price Index have hit record highs.

Anita Mo, CEO of the index compiler, stated that the index should be forward-looking by incorporating emerging companies based on sales growth. By the end of December, the tech gauge will be expanded to 50 members, with half of the new additions being the fastest-growing firms with sales of HK$500 million or more over two consecutive years.

The remaining 10 will be selected based on market capitalization, provided they meet a minimum average daily turnover of HK$100 million over the past three months. These thresholds aim to address concerns about the liquidity of smaller companies, which could impede effective fund tracking. Despite the introduction of new measures, the quarterly review mechanism will remain, and the maximum weight of any single constituent will be reduced from 10% to 8%.

The revised index composition will be announced on November 20 and will take effect on December 7, with Mo expressing the hope that the index will continue to grow alongside the Hong Kong market, strengthening its role as a "superconnector."