HSI Services, the compiler of the Hang Seng Index (HSI), is performing its quarterly review of index constituents, and analysts are betting China Merchants will be 'in' and red-chip conglomerate Shanghai Industrial Holdings 'out'.
Jeremy Sutch, head of Hong Kong research at ABN Amro, said in terms of market capitalisation, China Merchants was the biggest after the 33 constituent stocks and Shanghai Industrial the smallest of the present members.
The results will be released early or in the middle of next month and most analysts said a change was likely.
'Given that the market coverage ratio of the HSI has fallen for the fifth consecutive month to a recent low, a change in its constituents seems possible,' said Sandy Lee, a quantitative analyst with Nomura.
By the end of September, the market capitalisation coverage ratio of HSI constituent stocks was about 76.5 per cent excluding H shares, and 72.9 per cent including H shares, compared with 78.3 per cent and 74.5 per cent respectively, at the end of June.
Ms Lee said that although the ratio remained above the target of 70 per cent, it had recently touched a five-month low, due to the rising importance of H shares as a percentage of the market's total capitalisation.
