Last Friday, the Hang Seng Index released the results of the quarterly review of the Hang Seng Index up to December 31, 2020. Alibaba Health Information Technology, Longfor Group and Haidilao International Holding were included in the Hang Seng Index. At present, the number of constituent stocks in the Hang Seng Index has increased to 55.

As we all know, the constituent stocks that can become Hang Seng Index are blue chips of Hong Kong stocks, so it is particularly important to pay attention to the results of Hang Seng Index companies' review of each index.

Today, if you want to hear, let's take a look at how the constituent stocks of the Hang Seng Index are determined.

Number of constituent stocks of Hang Seng Index

According to the results of the latest HSI consultation on March 1, 2021, HSI companies aim to increase the number of constituent shares to 80 by mid-2022, and will gradually increase the number of index stocks to a maximum of 100 in the future, of which the number of H shares and non-H shares will not be fixed at a fixed level.

At present, there are only 55 constituent stocks after the latest adjustment of the Hang Seng Index.

It shows that more high-quality stocks will be included in the future.

Next, I would like to introduce to you what criteria are used by the Hang Seng Index to select constituent stocks.

Range of stock selection for constituent stocks of Hang Seng Index

• The constituent stocks are selected according to the following seven industries, and the industry groups will be formed.Conduct a review every two years：

1. Financial industry

2. Information technology industry

3. Non-essential consumption and necessary consumption

4. Real estate construction industry

5. Public utilities and telecommunications

6. Health care industry

7. Energy industry, raw materials industry, industrial and integrated enterprises

• Listing time requirements: at least three months on the market

• Market capitalization requirements: listed on the HKExThe total market capitalization of all ordinary shares is in the top 90%.(market capitalization refers to the average over the past year)

• Turnover requirements: listed on the Hong Kong Stock ExchangeThe turnover of all ordinary shares is in the top 90%.(turnover refers to the assessment of the total turnover in the past two years into eight quarters.)

• Weight limit of constituent equity: lowered from 10% to8%The upper weight limit of 8% for different rights of the same share and the second listed constituent stock

• Weight of Hong Kong companies: maintenance20 to 25Hong Kong constituent stocks

It should be noted that if any component stock of the Hang Seng Index is suspended for a continuous month, it will be removed from the index. Under very special circumstances, for example, the constituent stock is considered very likely to resume trading within a short period of time before it is possible to remain in the index.

Seeing this, some friends of Niu may ask

Are there any special requirements or differences between companies with secondary listing / different rights of the same shares?

Don't worry, I need to hear it. Take your time.

The inclusion requirements of companies with different rights of the same shares (primary listing):

• The listed company must be registered in any Greater China region, including Chinese mainland, Hong Kong, Macao and Taiwan.

• After deducting non-tradable shares with more than one vote, they must also be among the top 90% of the total market value and total turnover of all ordinary shares listed on the Stock Exchange.

The inclusion requirements of the second listed company (also applicable to the same share with different rights and general companies):

• The listed company must be registered in any Greater China region, including Chinese mainland, Hong Kong, Macao and Taiwan.

• After deducting registered share capital not circulating in Hong Kong (including shares held by depositors as relevant Hong Kong equity shares as overseas depositary securities), it is also among the top 90% of the total market capitalization and total turnover of all ordinary shares listed on the Hong Kong Stock Exchange.

Review time and mechanism of Hang Seng Index

• Regular review

The Hang Seng Index constituent stocks will be reviewed on a quarterly basis. The deadline for the quarterly review is the end of March, the end of June, the end of September and the end of December each year.

The results of regular reviews are usually released within eight weeks of the data cut-off date. Changes in constituent shares will be based onIndex adjustment scheduleEffective.

附：Adjustment schedule of Hang Seng Index in 2021

Why don't you put it away! )

Well, according to the adjustment schedule in the annex above, we know that the effective dates of this year's four indices areMarch 15, June 7, September 6 and December 6。

• Rapid integration mechanism

According to the Hang Seng Index company documents, at present, only the Hang Seng Technology Index, the Hang Seng Composite Index and the Hang Seng China Enterprises Index have a rapid inclusion mechanism for newly listed securities in addition to regular reviews. the rapid inclusion mechanism previously developed by the Hang Seng Index for large market capitalization enterprises has also been uniformly replaced for three months in the latest adjustment.

Remember: hang Seng Index ≠ Hang Seng Composite Index