bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

China Overseas Land and H-share giants get blue-chip status
PetroChina, China Shenhua Energy and China Overseas Land & Investment will join  the Hang Seng Index following the latest quarterly review, bringing the number of index constituents to 43.
Index compiler HSI Services said yesterday the changes would take effect on December 10.
PetroChina, the country's largest oil producer, and Shenhua, the biggest coal firm, had been expected to join the seven other H-share companies already on the blue-chip index.
Property developer China Overseas Land was  chosen over mainland industry leaders Aluminum Corp of China (Chalco) and China Cosco Holdings, more widely tipped given their high market value and  daily trading turnover over the past 24 months.
The weighting of PetroChina will be 5.84 per cent, the third-heaviest  on the index after China Mobile and HSBC Holdings. Shenhua has a 2.39 per cent weighting and China Overseas Land 1.07 per cent.
The move gives the  firms a higher profile and expose their shares  to buying by funds and other investors tracking the index, although the impact on the share price  is not expected to be significant or long-lasting.
'The  inclusion of Shenhua, PetroChina and China Overseas Land will not have a big positive impact  on the three stocks,' said Ben Kwong Man-bun, the chief operating officer at KGI Securities.
Index funds closely tracking the  key index would spend 'only one day' to complete the switch given the strong daily turnover, said a strategist at a pension fund. 'Acquisitions of the three stocks would be worth  about HK$4 billion.'
No companies were removed in the latest index review as HSI Services is gradually increasing the number of constituents to 50.
Market participants expect the remaining seven slots  to be set aside exclusively for H-share firms.
'I am not surprised  at the inclusion of Shenhua and PetroChina, as they have completed their A-share offerings ahead of the review,' said Wong Chi-man, an analyst at China Everbright Securities.
'I think Chalco and China Cosco will be included  in the next review, as their adjusted market values are larger than those of other candidates.'
Mainland brokerage ICEA listed six potential candidates that could join the index  by the end of  next year.
'We tip six mainland firms,  namely Country Garden, China Communications Construction, Nine Dragons Paper, China Coal, China Merchants Bank and China Telecom,' the brokerage said. 'All they have to do is to wait until the minimum listing historic requirement is fulfilled as well as the A-share flotation.'
The  growing importance of mainland  firms has prompted HSI Services to add more H-share companies to the index after selecting China Construction Bank Corp as the first mainland-incorporated firm in September last year.
'The Hang Seng Index is now just like a China stock index, as about 60 per cent of its composites are mainland-linked companies,' said Francis Lun Sheung-nim, the general manager of Fulbright Securities. 'After becoming a composite of the  index, PetroChina can reverse its recent weak trend.'
PetroChina's A shares  more than doubled on their debut on Monday, while its H shares  have dropped 11.8 per cent since the A-share offering.
Mr Lun said Jiangxi Copper and Chalco were qualified for the Hang Seng Index  but their share price fluctuations were too big.
'I expect more and more mainland companies will be included in the  index,' he said.
'H-share firms that are planning to list in the A-share market will be the next targets to be included in the index.'



PetroChina, Shenhua join Hang Seng Index