Hang Seng Indexes Proposes Tech Index Expansion, Adds Sales Growth Criterion
Hang Seng Indexes Company plans to expand its Hang Seng Tech Index (HSTECH) to 50 constituents. The proposal introduces sales growth as a new selection criterion, aiming to include more fast-growing technology firms.
HSTECH Expansion Plan
Hang Seng Indexes Company published a consultation paper on Monday, proposing a significant expansion of its Hang Seng Tech Index (HSTECH). The index would grow from 30 to 50 constituents. This change introduces "sales growth" as a new selection criterion, aiming to strengthen the index's market representation for technology firms. HSTECH launched in 2020.
It currently tracks the 30 largest Hong Kong-listed technology companies by market capitalisation. Investment products passively tracking the index held US$40.4 billion in assets under management (AUM) by June. The proposed framework seeks to capture a broader range of technology companies.
Dual-Selection Methodology
The company proposed a dual-selection framework for the expanded index. Under this new method, the top 40 stocks will be chosen primarily by market capitalisation. The remaining 10 constituents will be selected specifically based on their revenue growth.
Hang Seng Indexes Company stated that "fast-growing technology companies often have smaller market capitalisations." The existing market-cap framework traditionally prevented these high-growth firms from inclusion. To maintain index investability, the selection pool will narrow.
It will draw from constituents of the Hang Seng Composite LargeCap & MidCap Index, rather than all main board-listed securities.
The consultation paper also suggested removing fixed sector requirements for HSTECH. This move acknowledges that technology innovation now extends across traditional industries, blurring old boundaries. For investors, this expansion could diversify exposure within Hong Kong's technology sector.
Including growth-focused firms alongside established giants may alter the index's overall risk-reward profile. The shift could attract more capital to smaller, high-growth tech companies that might otherwise be overlooked. This change reflects a more dynamic and inclusive view of technology's evolving market impact.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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