China’s tech behemoths like Alibaba, Xiaomi will be allowed to join Hong Kong’s benchmark Hang Seng Index as biggest reform since 2006 approved
- Hang Seng Index will for the first time add companies with multiple classes of voting rights and those with secondary listings
- The change marks the biggest reform to the benchmark gauge in 14 years
The compiler of Hong Kong’s benchmark stock index will for the first time admit companies with weighted voting rights (WVR) and those with secondary listings, as constituent stocks.
The decision, announced by the Hang Seng Indexes Company on Monday after a two-month consultation, paves the way for technology giants such as Xiaomi, with its WVR structure, and Alibaba Group Holding, with its secondary listing, to be included in the index.
It marks the most important revamp of the 50-year-old Hang Seng Index since the inclusion of H-shares in 2006.
The earliest possible time for the inclusion of new stocks will be August.
The reform aims to make sure the benchmark index tracking Asia’s third-largest stock market includes the most valuable stocks. The index has until now excluded WVR and secondary-listing companies even though they are the largest and most traded shares in Hong Kong.
“The decision to add these companies into the Hang Seng Index is strongly supported by the market, with 90 per cent of respondents are in favour,” said Vincent Kwan, chief executive of Hang Seng Indexes in a telephone conference after the announcement. “The change will be an important milestone for the Hang Seng Index to cover the increasing number of technology companies listing in Hong Kong.”