Hang Seng Index: review likely to offer more of the same as Kuaishou, JD Health and Li Auto tipped to increase tech, pharma dominance

The latest changes to the benchmark Hang Seng Index will be made on Friday and will take effect from March 13, according to Hang Seng Indexes Company

Kuaishou, JD Health and Li Auto are among the common picks that could potentially be added to the index at China Renaissance Securities and CICC

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The latest review of the Hang Seng Index is likely to see more Chinese tech and healthcare companies added to the benchmark. Photo: SCMP

Published: 7:30am, 20 Feb 2023

Global funds seeking new investment flavours in Hong Kong’s stock market will have to live with more of the same as Chinese technology and healthcare companies are tipped to join the city’s benchmark index after a review this week.

Kuaishou, JD Health and Li Auto are among potential candidates to make it to the blue-chip index when the review is announced on Friday, according to the common picks at local brokerages including China Renaissance Securities and China International Capital Corp.

The trio had a combined market value of HK$641 billion (US$81.2 billion) as of February 17, according to stock exchange data, representing 2.7 per cent of the current capitalisation of the 76 members of the Hang Seng Index.

“Decisions on inclusion are political as well as market-based, as they naturally impact fund flows to chosen sectors and companies,” said Brock Silvers, chief investment officer at private equity firm Kaiyuan Capital in Hong Kong. The changes are likely to be highly correlated to increasing longer-term tensions in US-China relations, he added.

Kuaishou and JD Health have slumped 15.6 per cent and 18.7 per cent this year, after recording little change and a 12 per cent jump in 2022, respectively. Li Auto has surged more than 23 per cent this year, after a nearly 40 per cent crash last year.