A Preview of the March Adjustment for Stock Connect: 44 Hong Kong Stocks Expected to Be Included, with Insilico Medicine and JD.com Industrial Among Them

According to the quarterly review results announced by Hang Seng Indexes Company on February 13, the adjustments will officially take effect starting from March 9 (next Monday). After the index adjustment becomes effective on March 9, the Shanghai and Shenzhen Stock Exchanges will subsequently (the specific timing to be determined by the exchanges) adjust the eligible securities scope for the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect programs accordingly.

The March adjustment for Hong Kong Stock Connect is about to take effect, with 44 stocks expected to be included.

Based on the changes in Hang Seng Composite Index and Hong Kong Stock Connect Index published by Hang Seng Indexes Company, combined with forecasts from various brokerage firms, a total of 44 stocks that are most likely to be newly added to Hong Kong Stock Connect have been identified for investor reference. The accurate list of changes to Hong Kong Stock Connect should be based on the official announcements from the Hong Kong Stock Exchange, Shanghai Stock Exchange, and Shenzhen Stock Exchange.

Taking into account the requirements for constituent stocks of the Hang Seng Composite Index, as well as the additional criteria for inclusion in the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect (such as small-cap stocks of the Hang Seng Composite Index requiring a market capitalization of over HKD 5 billion, exclusion of stocks under risk warnings or delisting, and companies with weighted voting rights needing to meet additional conditions such as being listed for at least six months and twenty trading days and meeting market capitalization and trading volume thresholds), this round may include a total of 44 stocks that meet the standards for inclusion in the Stock Connect. These include:

$BANK OF E ASIA (00023.HK)$ 、 $CTF SERVICES (00659.HK)$ 、 $DEEPEXI TECH (01384.HK)$ 、 $SOFTCARE (02698.HK)$ 、 $CHUANGXIN IND (02788.HK)$ 、 $QFIN-S (03660.HK)$ 、 $JD INDUSTRIALS (07618.HK)$ 、 $INSILICO (03696.HK)$ 、 $160 HEALTH (02656.HK)$ 、 $AB&B BIO-TECH-B (02627.HK)$ 、 $BAO PHARMA-B (02659.HK)$ 、 $PEGBIO CO-B (02565.HK)$、 $GENFLEET-B (02595.HK)$、 $XUANZHUBIO-B (02575.HK)$Etc.

I. Constituent stocks already included in the Hang Seng Large and Mid-Cap Index will definitely be included in the Hong Kong Stock Connect eligible list. Seven such companies are identified.

II. Another 37 companies that may potentially be included in the Hong Kong Stock Connect eligible list.

It should be noted that, $HASHKEY HLDGS (03887.HK)$ and $OSL GROUP (00863.HK)$ as a newly listed virtual asset platform, although it meets the inclusion criteria of this round in terms of traditional metrics such as market capitalization coverage and turnover rate, uncertainties may still arise due to its nature as a virtual asset platform. Investors should be mindful of these potential risks.

Additionally, some companies may also be included for other reasons: $NANHUA FUTURES (02691.HK)$ Due to its dual listing on A+H shares, it was directly included in Stock Connect trading on January 19 after the 30-day price stabilization period ended; $OMNIVISION (00501.HK)$ followed by $GIGADEVICE (03986.HK)$ As an A+H company newly listed on the Hong Kong Stock Exchange this January, it will also be gradually included after the stabilization period ends.

Regarding companies with weighted voting rights, $GEEKPLUS-W (02590.HK)$ it was included in Stock Connect on February 6 this year, $HESAI-W (02525.HK)$ and is expected to be included in April, while $MININGLAMP-W (02718.HK)$ 、 $PONY-W (02026.HK)$ followed by $WERIDE-W (00800.HK)$ due to its listing in November last year, it will not be eligible for inclusion until the second half of this year.

The 'new liquidity' effect during the Hong Kong Stock Connect adjustment window is significant.

Reviewing the Hong Kong Stock Connect adjustments from February 2017 to now, new inclusions have demonstrated notable and stable excess returns relative to the Hang Seng Index during the window period between the announcement of Hang Seng Composite Index adjustments and the effective date.

The market believes there are multiple possible reasons for this phenomenon, including adjustments to the index components leading to passive buying by relevant ETFs, inflows of southbound Stock Connect funds due to newly eligible Hong Kong-listed stocks, speculative capital leveraging thematic trading, and some newly eligible Stock Connect stocks having relatively low floating shares due to their recent listing.

Historically, adjustments to Hong Kong Stock Connect have significantly impacted the liquidity and price trends of related stocks. For example, according to LiveReport big data statistics, on September 8, 2025, when the latest adjustment took effect, the average daily turnover of the 20 newly included stocks surged by approximately 4.3 times compared to their prior average daily turnover.

以$COUNTRY GARDEN (02007.HK)$ For example, prior to its inclusion in Stock Connect, the stock's average daily trading volume was less than HKD 50 million but had exceeded HKD 100 million by the trading day before inclusion. On September 8, 2025, the first day of inclusion, the trading volume surged to HKD 485 million, representing an approximately tenfold increase from the previous average daily trading volume. The stock price rose 6.25% on the same day, significantly outperforming the Hang Seng Mainland Real Estate Index, which gained only 1.54%.

On the following trading day, Country Garden continued to strengthen in early trading. Within just one hour of opening, the trading volume reached 988 million shares, with a turnover of HKD 592 million, surpassing the total turnover of its first inclusion day. Regarding this performance, Yuan Mei, Director of Research at Frost & Sullivan Jielian (Shenzhen) Cloud Technology Co., Ltd., noted that Country Garden was among the stocks that clearly benefited from improved liquidity. Since its share price had not risen significantly prior to inclusion, this move demonstrated classic characteristics of 'catch-up growth.'

$DUALITYBIO-B (09606.HK)$ Its performance was equally impressive. On the trading day before inclusion (September 5), its share price had already strengthened in advance, rising by 7.14%, with a turnover of HKD 1.68 billion. On the day of inclusion, September 8, the turnover surged to HKD 13.94 billion, ranking at the top among all newly added stocks. In the subsequent weekly trading, the company's share price continued to rise, with cumulative gains exceeding 40%, reflecting significant market enthusiasm.

$BRAINAURORA-B (06681.HK)$ 、 $MIRXES-B (02629.HK)$ 、 $BRETON (01333.HK)$ 、 $AUNTEA JENNY (02589.HK)$ Several other Hong Kong stocks also exhibited similar trends, with both share price volatility and trading volumes surging significantly. The average daily trading volume increased several-fold or even dozens of times compared to before inclusion.

Be Cautious of Profit-Taking Following Stock Connect Inclusion

However, it is important to note that for newly listed stocks with smaller free float, although they may experience short-term speculative trading due to passive fund buying after inclusion, they often face significant correction risks once speculative funds exit.

以$TRANSTHERA-B (02617.HK)$ For instance, after being included in the Stock Connect program, the stock’s price accelerated upward, surging by 20.13% on September 8. Within just a few trading days, the maximum gain exceeded tenfold. On the day of inclusion, the turnover reached HKD 1.96 billion, skyrocketing dozens of times compared to the previous average daily trading volume. However, starting from September 16, the share price of Yaotai Ankang-B suddenly plunged like 'diving from a high platform,' plummeting by 53.73% on that day. On September 18, it fell another 12.43%, causing substantial losses for investors who had bought at the peak.

Market analysis indicates that this clinical-stage biopharmaceutical company already showed signs of weakness at its June 2025 IPO: raising only HKD 200 million, highly concentrated equity, and international placement subscribed only 0.95 times. After inclusion, nearly HKD 50 billion worth of 15 related ETFs were required to passively build positions due to index rules, injecting over HKD 1 billion into the company. With an average daily trading volume of merely about HKD 15.88 million before inclusion, the extremely small free float could not absorb the massive inflow of passive funds, directly driving the share price to soar in the short term—up 77% on September 12 and another 116% on September 15.

The 'severe plunge' on September 16 was driven by speculative funds that had been lying in wait, taking the opportunity to clear out as passive funds stepped in. Ultimately, those harmed were not only retail investors who directly purchased through the Shanghai-Hong Kong Stock Connect but also investors participating indirectly via ETFs. Both groups became 'scapegoats' for capital arbitrage.

A similar case is $BAYZED HEALTH (02609.HK)$ . After inclusion, the stock’s volatility continued to increase. On September 12, it once surged by more than 27% during the session, with a full-day volatility exceeding 26%. In the following three trading sessions, the volatility remained above 50%, and after consecutive sharp rises, the stock fell over 10% for two consecutive trading days.

Huatai Securities noted in a previous research report that the latest adjustment to the Shanghai-Hong Kong Stock Connect showed clear signs of preemptive trading. Due to significant inflows of southbound funds becoming the key incremental capital source, potential included stocks achieved excess returns far above historical averages between the observation cut-off date and the announcement date. However, this capital game also led to negative excess returns between the announcement and effective dates, with evident profit-taking by arbitrage funds.

Looking ahead to this adjustment, Huatai Securities believes that trading in the Shanghai-Hong Kong Stock Connect may become more left-tailed in 2024. With southbound fund inflows slowing by 20%-40%, the excess returns for newly included individual stocks in the Stock Connect may be lower compared to 2025 but are still expected to exceed historical averages.

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Editor/KOKO