New | Hang Seng may add red chips, private companies in H-shares index revamp
The 23-year old H-shares index needs an update to provide a more representative China index of the Hong Kong market, compiler says.
Hang Seng Indexes Company will announce as early as August the final plan on the inclusion of red-chip stocks and private Chinese enterprises in the Hang Seng China Enterprises Index for the first time, according to the equity index compiler.
“We are seeking views from market participants. Initial feedback is encouraging,” Vincent Kwan, director and general manager of Hang Seng Indexes Company (HSI) told the South China Morning Post.
The company, which is Hong Kong’s main index compiler, has recently proposed to add the so-called red chips and private Chinese enterprises, or P-chips, into its widely tracked Hang Seng China Enterprises Index (HSCEI), which is also known as the H-shares index. The index was launched in 1994.
Red-chips refer to state-owned Chinese companies that are incorporated outside of mainland and listed in Hong Kong. P-chips are private Chinese companies that are incorporated internationally, most often in the Cayman Islands, Bermuda and the British Virgin Islands.
Kwan said it takes several months to talk to market participants and analyse their responses about how many red-chips and P-chips should be added. Another important issue is the selection criteria for inclusion.
“If they are supportive of the proposal, we will announce the final plan in August,” Kwan said.