In the next round of Hong Kong’s stock revamp, the experts are planning to adjust the equity benchmark by adding consumer and healthcare stocks. The Index compiler makes a push to reach the 80-members goal.
The two companies that are deserving to be included in Hang Seng Index are Drug store operator JD Health International Inc. and Restaurant chain operator Yum China Holding Inc.
These two companies are potential candidates for inclusion in Hang Seng Indexes Co., announcing the result of its quarterly review on Friday. The analysts are expecting a net addition of three to four stocks to the 76-member Hang Seng Index.
“Currently, the consumer and healthcare industries are underrepresented in the Hang Seng Index, so stocks in these two industries have a greater chance of being included,” CMB International Capital Corp. strategist Daniel So wrote in a recent note.
Meanwhile, large-cap stocks including short-video platform Kuaishou Technology and automaker Li Auto Inc. may miss out on inclusion this time due to profitability concerns. “Past experience shows that unprofitable shares are basically not included,” So wrote.
“Consensus expectations for negative earnings-per-share in both 2022 and 2023” could hold Kuaishou back from inclusion, Bloomberg Intelligence analysts including Marvin Chen wrote in a note. Potential additions include JD Health and Shandong Weigao Group Medical Polymer Co., he added.
Initially, Hang Seng Indexes were planning to increase HSI constituents to 80 by mid-2022 but failed to set a new timeline after missing that goal. Now it aims to reach 100 members, and eventually, they will.
In November, the index compiler named three additions to the benchmark, including Haier Smart Home Co., Tingyi (Cayman Islands) Holdings Corp., and China Resources Mixc Lifestyle Services Ltd.
The Hang Seng Index entered a technical correction on Thursday after falling more than 10% from a January 27 peak, as growing geopolitical concerns and doubts over China’s economic recovery spurred profit-taking. The downshift followed a rally since November.
- Published By Team Hongkong Journalist