The pending listing of China Telecom, the mainland's largest fixed-line carrier, is facing a setback with the likelihood it will not be included in Hong Kong's benchmark index.
Vincent Kwan, director and general manager of HSI Services, said China Telecom would not be included in the Hang Seng Index if it was listed as an H share.
'We haven't seen the details of China Telecom's listing, but if it is an H-share company, it will not be included,' Mr Kwan said.
According to sources involved in China Telecom's forthcoming Hong Kong and New York dual-listing, it is planning to issue up to 25 per cent of the company's shares to the public in the form of H shares. The offering is expected to occur in late October and raise between US$2.5 billion and US$3.5 billion.
Mr Kwan said reasons for the exclusion of H-share companies from the benchmark index included their complicated shareholding structure, which quite often combined A-share listings in the mainland, making it difficult to calculate their weighting.
Also, H-share companies, which register and operate businesses in the mainland, did not meet the Hang Seng Index's original purpose of representing a sample of stocks listed and based primarily in Hong Kong.
'We have a separate index to track H-share companies' performance. We don't have any plan to change this rule,' Mr Kwan said.