Tencent Holdings Ltd. and Cnooc Ltd. are among 11 companies that will join the Hang Seng China Enterprises Index, while China Railway Construction Corp. will be removed, Hang Seng Indexes Co. said in its quarterly review.
The changes will take effect on March 5 and increase the number of constituents on the gauge to 50, the index compiler said in a statement Tuesday. The number of constituents has been kept at 40 since 2010, but Hang Seng Indexes said last March it proposed expanding coverage by adding so-called red chips and P chips to develop a more representative China index.
Tencent, Cnooc and eight other red chips and P chips met all the selection criteria for joining the HSCEI, according to the review. Red chips are mainland-based companies incorporated internationally and listed in Hong Kong, while P-chips are private Chinese enterprises controlled by mainland individuals.
The list includes Citic Ltd., Guangdong Investment Ltd., China Gas Holdings Ltd., China Mobile Ltd., Hengan International Group Co., CSPC Pharmaceutical Group Ltd., China Resources Land Ltd. and Shenzhou International Group Holdings Ltd. In addition, ZhongAn Online P&C Insurance Co.’s H shares will replace China Railway Construction, bringing the total to 50.
A Hang Seng H-Share Index will be launched covering the 40 H shares in the HSCEI to cater for market interest in such a benchmark, the statement said. The index calculation will be freefloat-adjusted market-value-weighted with a 10 percent cap on individual constituents, it said.
The H-share gauge missed out on a global technology rally last year, with its 25 percent gain amounting to less than half that of the MSCI China Index, which counts Tencent and Alibaba Group Holding Ltd. as members. The HSCEI on Tuesday suffered its biggest loss since July 2015 amid a global equity market rout.
To contact the reporter on this story: Jeanny Yu in Hong Kong at jyu107@bloomberg.net.
To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Will Davies
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