Hang Seng Indexes Company has announced the launch of the Hang Seng Stock Connect Big Bay Area Composite Index.
The index aims to reflect the performance of companies that are listed in Hong Kong and/or mainland China and that mainly operate in the Guangdong-Hong Kong-Macao Big Bay Area (‘Big Bay Area’).
The firm explains that the Big Bay Area encompasses nine cities and two Special Administrative Regions (‘SARs’), namely Hong Kong, Macao, Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Zhaoqing, Huizhou and Jiangmen.
The index will have 250 constituent companies. The index universe includes Stock Connect eligible Hong Kong-listed stocks and Mainland-listed A-Shares that mainly operate in the Big Bay Area. The index is freefloat-adjusted market-capitalisation-weighted.
Mr Daniel Wong, Director & Head of Research and Analytics at Hang Seng Indexes, says: “The Guangdong-Hong Kong-Macao Big Bay Area is an economically important region that is attracting growing international interest and recognition, alongside New York Metropolitan Area, San Francisco Bay Area and Tokyo Metropolitan Area. The nine cities and two SARs in the Big Bay Area each have their own particular economic characteristics. More development and cooperation in the Area may result in greater prosperity.”
From a geographic perspective, 99 of the 250 constituent companies have Shenzhen as their main base of operations. At around 48 per cent, Shenzhen has the heaviest weighting in the index. Hong Kong and Guangzhou follow, with weightings of 26 per cent (64 companies) and 8 per cent (43 companies) respectively. In terms of industry distribution, Financials, Properties & Construction, Consumer Goods and Information Technology account for the majority of the index weighting, at 31 per cent, 20 per cent, 17 per cent and 13 per cent respectively. The index includes a total of 146 companies operating in these four industries, with a combined weighting of 81 per cent.
Wong says: “The Big Bay Area is a theme that is of increasing interest to investors in Hong Kong and the Mainland. The launch of Hang Seng Stock Connect Big Bay Area Composite Index is responding to this new market development. We will continue to observe Big Bay Area development and plan, with the aim of identifying the potential for launching a variety of thematic indexes that use the Hang Seng Stock Connect Big Bay Area Composite Index as the universe for constituent selection. The launch of a series of Big Bay Area indexes will facilitate the market to develop index-linked products, and further integrate the real economy and financial development. This will help drive the economic progress of the Big Bay Area.”