Hang Seng Indexes Co Launches New Series To Tap Mainland-HK Equity Market Link

Tom Burroughes

30 November 2016

Investors who want to replicate returns from equities traded via the Hong Kong-mainland China Stock Connect system, created late in 2014, now have three bespoke indices for this market.

The Hang Seng Indexes Company is to launch the Hang Seng Stock Connect Hong Kong Index Series on 5 December. More indices are due to be added later on, the firm said.

The series includes three indices: the Hang Seng Stock Connect Hong Kong Index (HSHKI), the Hang Seng Stock Connect Hong Kong MidCap & SmallCap Index (HSHKMS), and the Hang Seng Stock Connect Hong Kong SmallCap Index (HSHKS).

The creation of the stock market link in late 2014, coupled with developments such as the rollout in 2015 of the Mutual Recognition of Funds Regime (between mainland China and Hong Kong), are ways in which China is seen as opening its capital markets to overseas money, and aiding the development of its renminbi currency as a global medium of exchange.

The series provides a benchmark for the performance of equities listed in Hong Kong that are eligible for trading via the southbound trading link of the Stock Connect Scheme, while the HSHKMS and HSHKS reflect the performance of the mid-cap and small-cap and the small-cap segments of the HSHKI respectively. The indexes are provided to the market for benchmarking and product development purposes. All three indexes will be calculated and disseminated real-time at two-second intervals.