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Pedestrians walk past a stock ticker outside Exchange Square. Hong Kong’s stock market is Asia’s third largest after China and Japan. Photo: EPA-EFE
BusinessChina Business

Country Garden to drop out of Hang Seng Index as Hong Kong’s stock benchmark adds Sinopharm in quarterly recalibration

  • The number of Hang Seng Index constituents will be unchanged at 80, with the changes effective from September 4
  • Trip.com Group and Zijin Mining Group were among four companies added to the benchmark in the last review
Hong Kong stock market
Zhang Shidong
Mia Castagnone
Zhang Shidongin ShanghaiandMia Castagnonein Hong Kong
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Sinopharm Group will be added to the Hang Seng Index next month after the latest quarterly review of Hong Kong’s stock benchmark, while property developer Country Garden Holdings will be removed after becoming a penny stock.
That will keep the number of constituents unchanged at 80, compiler Hang Seng Indexes said in a statement after the market close on Friday. The changes will be effective from September 4.

The index compiler has added new constituents to the Hang Seng gauge for a second consecutive quarter after surprising investors by making no additions in February.

Hang Seng Indexes has fallen behind schedule in expanding the benchmark since it announced a sweeping plan in 2021 to overhaul the Hang Seng Index, which will eventually have 100 constituents. In the last rebalancing, four companies, including online travel agency Trip.com Group and gold producer Zijin Mining Group, were added to the index.
Trip.com was added to the Hang Seng Index in the last review by the index compiler. Photo: Shutterstock

After the change, the Hang Seng Index will cover 64 per cent of the overall value of the Hong Kong market, compared with 65 per cent currently, according to the statement.

As part of a quarterly review of the Hang Seng family of indexes, Trip.com will join the 50-member Hang Seng China Enterprises Index of Chinese companies trading in Hong Kong, the statement said. Property management firm Country Garden Services Holdings, an affiliate of Country Garden, will be removed from the gauge.

Shares of Sinopharm dropped 0.5 per cent to HK$21.20 on Friday, trimming to 6.9 per cent their gain for the year. Country Garden’s stock fell 1.4 per cent to HK$0.76, losing 72 per cent of its value this year amid slumping home sales and a liquidity crunch.

Hang Seng Indexes has made some headway in diversifying the composition of Hong Kong’s stock benchmark. Foreign companies with Hong Kong as their primary listing venue will be eligible to become members of the Hang Seng Index in the next rebalancing in November, the compiler said last month, following a two-month consultation with market participants.

That has paved the way for the possible addition of Italian luxury goods producer Prada and US luggage maker Samsonite International. The aggregate weightings of overseas companies will be capped at 10 per cent of the index, according to Hang Seng Indexes.

The Hang Seng Index has dropped more than 9 per cent this year, making it one of the worst performing key stock gauges globally, as China’s post Covid-19 economic recovery sputters and its trade war with the United States persists.

The gauge, which was launched in 1969, has a market capitalisation of HK$11.4 trillion (US$1.5 trillion). Hong Kong’s stock market is the third-largest in Asia with a value of US$5 trillion after China with US$9.9 trillion and Japan with US$5.8 trillion, respectively, according to Bloomberg data.

The Hang Seng family of indexes was tracked by passive funds with US$57.6 billion in assets under management globally by the end of last year, according to the compiler.

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