Hang Seng China Enterprises Index (HSCEI) will move to a free-float adjusted market capitalisation method for calculating constituents' weightings next year, HSI Services announced yesterday.
The change will put HSCEI's weightings calculation method in line with that of the Hang Seng free-float index series.
The 11-year-old HSCEI groups the largest state-owned companies listed in Hong Kong and is better known as the H-share index.
The free-float adjustment will begin after the next regular half-yearly review of the index's constituents in February along with a new 15 per cent cap on individual stock weightings after the free-float adjustment, to reduce dominance by a few large companies, HSI Services said.
'The change in methodology of HSCEI was mainly due to the different forms of listing among mainland firms, and the company with larger market capitalisation will lead to domination problems,' HSI Services director and general manager Vincent Kwan said.
'The change in methodology is not in response to market speculation on the change to the selection criteria of Hang Seng Index constituents. This is a separate issue.'