Hang Seng Indexes Company has proposed expanding the Hang Seng Tech Index (HSTECH) from 30 to 50 constituents, according to a consultation paper released on Monday.
The HSTECH, which was launched in 2020, currently tracks the 30 largest Hong Kong-listed technology companies by market capitalisation.
The revamp is intended to include more companies representing the artificial intelligence and robotics sectors.
Under the proposal, the top 40 stocks would be selected by market capitalisation, while the remaining 10 would be selected based on revenue growth.
Fast-growing technology companies often have smaller market capitalisations.
The company stated that the traditional market-cap framework prevents high-growth companies from being included.
To maintain index investability, the selection pool for the HSTECH would narrow from all Hong Kong main board-listed securities to constituents of the Hang Seng Composite LargeCap & MidCap Index.
The consultation paper also suggested removing fixed sector requirements, noting that technological innovation now spans traditional industries.
Market context
The expansion comes as assets under management by investment products passively tracking the HSTECH reached US$40.4 billion by June.
The move to expand the index to include more constituent companies is described as a long-awaited step for investors seeking to capture technological advances in China.
