MSCI adds WH Group to its MSCI Hong Kong index

PUBLISHED : Friday, 07 November, 2014, 12:31pm
UPDATED : Saturday, 08 November, 2014, 5:26am

MSCI, one of the world's largest providers of financial market indices, has added Sino-US pork supplier WH Group to its MSCI Hong Kong index. No constituent stock was removed.

Shares of WH, which bought US meat major Smithfield Foods, yesterday closed unchanged at HK$5.15, still 16.9 per cent below the price they were listed in August.

Despite being added to a major index, WH has disappointed investors as its quarterly revenue and earnings have dropped, raising questions over its integration with Smithfield.

Smithfield, the world's largest pork producer, yesterday reported third-quarter net income jumped to US$155.3 million from US$35.4 million a year earlier while sales climbed 11 per cent to US$3.7 billion.

Shares of WH plunged 20 per cent late last month after its major subsidiary, Shuanghui Development, posted lacklustre quarterly results.

Shortly before the stock tumble, Beijing-based private equity group CDH Investments, WH's largest shareholder, pledged HK$12.6 billion worth of WH shares to secure a loan for repaying its shareholders.

In other index changes, media conglomerate Tom Group was added to the MSCI Global Small Cap Indexes. Tom shares rose 3.68 per cent to HK$1.69 on the news.

MSCI also added seven companies, including brokerage house China Galaxy Securities, to its MSCI China index, which tracks mainland companies listed in the US and Hong Kong. It removed eight stocks including cash-strapped property developer Country Garden Holdings.

Country Garden's new chief financial officer Wu Jianbin plans to halve the company's funding cost in the next two years and begin strategic changes to make it more diversified amid a cooling property market.

Country Garden, one of the 10 largest property developers on the mainland, recently raised HK$3.2 billion in a rights issue. Its stock yesterday fell 0.33 per cent to HK$3.02.

In an annual review in July, MSCI, whose indices are the yardstick for fund managers, chose not to include mainland stocks in its mainstream indices in the face of resistance from fund mangers.

Only a handful of large foreign institutional investors are allowed to buy and trade mainland stocks in two quota systems, limiting access to other investors.