Hang Seng Indexes (HSI), which licenses the Hong Kong stocks benchmark, said on Friday it would allow China International Fund Management to use its tech index as an underlying index for an exchange-traded fund (ETF).
The ETF was listed on the Shanghai Stock Exchange on Friday with assets under management (AUM) of 252 million yuan ($40 million).
The Hang Seng Tech Index represents the 30 largest technology companies listed in Hong Kong “that have high business exposure to technology themes and pass the index’s screening criteria”, HSI said.
The new ETF will bring the number of exchange-traded products linked to the Hang Seng Tech Index to 24 – with listings on 10 different stock exchanges across the world.
Products passively tracking the tech index had reached an aggregate AUM of about $5.9 billion by the end of 2021. Those passively tracking the entire Hang Seng range stood at a total AUM of about $44 billion.
HSI is a wholly owned subsidiary of Hang Seng Bank. The tech index fell 1.3% in early afternoon trading on Friday.
Transformation of HK Index
The HSI group is becoming more tech-oriented as new disclosure rules in the US make life difficult for mainland Chinese companies with American depository receipts (ADRs), HSBC said in a recent research note.
As more Chinese companies delist from New York and re-list in Hong Kong, this “‘homecoming’ trend is leading to a radical transformation of the traditionally financial-centric Hang Seng Index”, Herald van der Linde, head of HSBC equity strategy, said.
Technology stocks now account for 17% of the total HSI and consumer discretionary accounts for 19% – up from 12% and 6% respectively in 2019.
“If all remaining ADRs re-list in Hong Kong and are included in the HSI, these numbers would rise to 18% and 23% respectively,” he added.
Market liquidity could rise to $27 billion from the current $22 billion, van der Linde noted.
- George Russell