The Hang Seng Index made rule changes on Monday to allow it to incorporate Chinese internet giants Alibaba, Xiaomi and Meituan Dianping, a move set to shake up the composition of the 50-year-old index.
FILE PHOTO: Passersby look at a panel at a bank displaying the benchmark Hang Seng Index, after morning trading in Hong Kong April 17, 2015. REUTERS/Bobby Yip
“There is a perception that local indices like Hang Seng aren’t necessarily reflective of the opportunity set available out there,” said Michael Lai, China equities portfolio manager at Franklin Templeton.Companies from Greater China with a secondary listing in Hong Kong and those with two classes of shares carrying different voting rights will be included in the index, starting from August, with a weighting cap of 5%, the index provider said in a statement.
Alibaba, Xiaomi and Meituan - the only companies with dual-class or equivalent structures in Hong Kong - are typically among the top five stocks traded there by value each month. Alibaba has a voting structure different from the other two. A small group of current and former senior managers can nominate a majority of its board. But it is likewise treated as a dual-class shares firm by the Hang Seng Indexes Company.Other companies with dual-class shares, such as U.S.-listed internet company Baidu and online commerce firm JD.Com are planning secondary listings in Hong Kong, Reuters reported this year.
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