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Hang Seng Index
BusinessBanking & Finance

Nongfu Spring, Lenovo are added to Hang Seng Index, while Evergrande unit is dropped from China gauge

  • Friday’s additions surprise the market, as many had forecast that more firms will be added to meet compiler’s goal of expanding the gauge to 80 constituents
  • Evergrande Property Services Group is replaced by Xinyi Solar Holdings on the China Enterprises Index

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The two new stocks will have a combined weighting of 1.15 per cent, with Nongfu Spring contributing 0.69 per cent and Lenovo contributing 0.46 per cent. Photo: AFP
Enoch Yiu
Hang Seng Indexes Company, the compiler of Hong Kong’s Hang Seng Index, has added Nongfu Spring, China’s largest bottled-water seller, personal computer maker Lenovo to the benchmark in its latest quarterly review, it said on Friday.
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The compiler also removed Evergrande Property Services Group, which is part of the heavily indebted China Evergrande Group, from the Hang Seng China Enterprises Index, and replaced it with Xinyi Solar Holdings. It removed China Evergrande from the index that tracks Chinese stocks in its November review.
With the addition of the two new blue chips effective March 7, Hang Seng Indexes has broadened the index’s coverage to 66 firms from the current 64. This also means that the compiler is poised to miss its target of having 80 constituent stocks by the middle of this year, as there will be only one more review before that deadline.

Friday’s additions surprised the market, as many had forecast that the compiler will add more firms to the index to meet its goal of expanding the gauge. Hang Seng Indexes added only four stocks, JD.com, NetEase, ENN Energy and China Resources Beer, to the gauge during its last review, in November 2021. It did not remove any constituents from the index then.

“It is a surprise that Hang Seng Indexes only chose two new additions this time. It is obvious that the compiler has given up its target of expanding the constituent stocks to 80, as there is no way for it to add 14 stocks in the May review,” said Kenny Ng, a securities strategist at Everbright Securities International. “This maybe due to the fact that the market has been volatile and the compiler does not want to make a big change to the index.”

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Friday’s picks were sensible as they would help to increase the representation of consumer stocks and technology stocks among blue chips, he added.

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