Exclusive | Hang Seng Index compiler says it will be tough to meet target of 80 constituent stocks by next year
- In the past two quarterly reviews, Hang Seng Indexes chose only three new stocks each time and removed one, giving a net addition of five
- Expansion of constituent stocks in HSI to 80 next year is aimed at widening sector representation in the index
Hang Seng Indexes, compiler of the benchmark index for the Hong Kong stock market, faces an uphill struggle to add qualifying new stocks to the benchmark in each of its next three quarterly reviews to meet a target of 80 by mid-2022, a senior executive said.
“We still maintain the target to reach 80 constituent stocks by mid next year. But … we may not always be able to reach the target if we cannot find the right stocks to add to the index,” Daniel Wong, director and chief index officer at the Hang Seng Indexes Company, told the South China Morning Post in a telephone interview.
“We want to expand the number of constituent stocks … but it is more important to make sure the stocks we choose to add in the Hang Seng Index qualify and can meet all the requirements of having a big market cap, high turnover, with good financial performance and can represent their industries.”
In the past two quarterly reviews, Hang Seng Indexes chose only three new stocks each time and removed one, giving a net addition of five and bringing the total to 60 as of September 6.
This means that the next three quarterly reviews would need to add about seven stocks each time to meet the 80 target, which Wong said would be “difficult”.
