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Hang Seng Index review to boost market capitalisation by 4.5%: Goldman Sachs

The latest quarterly review of the Hang Seng Index will likely boost the capitalisation of the benchmark of Hong Kong stocks by 4.5 per cent and attract buying of stock including Tencent Holdings and BeOne Medicine, according to Goldman Sachs.

The market capitalisation of the Hang Seng Index is expected to rise to US$2.15 trillion after the review result showed on Friday that biotech firm BeOne Medicine, Aluminum Crop of China (Chalco) and parcel delivery firm J&T Global Express would join the gauge next month, analysts led by Alvin So at the US investment bank said in a report on Sunday.

Tencent, BeOne Medicine, Baidu and NetEase may lure buying from passively-managed global funds ranging from US$200 million to US$1 billion, due to the changes of the weightings of the Hang Seng Index, it said.

As a result of the quarterly rebalancing, the estimated price-to-earnings ratio for the Hang Seng Index members in the following 12 months would rise to 11.2 times from 11.1, the report said.

The quarterly review increased the number of the constituents on the Hang Seng Index to 93 from 90 currently, inching towards an ultimate goal set by the index compiler of having 100 members.

As was expected by investors, Chinese AI model firms MiniMax Group and Knowledge Atlas Technology, now known as Z.ai, would be included in the Hang Seng Tech Index in June.

Meanwhile, the two companies alongside five others would also join the Hang Seng Composite Index, paving the way for them to be eligible for mainland buying through the exchange link programme.

Social Media Asia Editor