《Investment Wisdom》The Hang Seng Indexes Company announced last Wednesday (7th) the summary of its consultation on the revision of the Hang Seng Tech Index calculation methodology. This revision has received support from over 80% of market participants and will officially take effect on December 7. In my view, this reform is heading in the right direction. Its core significance lies not merely in simple expansion, but in shifting from "industry labels" to "technology themes," allowing the index calculation to reflect the true landscape of the technology industry.
Previously, the Hang Seng Tech Index selected stocks based on five designated industries under the Hang Seng Industry Classification System. This approach, however, has become increasingly inadequate amid the blurring boundaries of the technology industry. Numerous companies with genuine technological attributes are excluded because their primary business is classified under traditional industries. Conversely, some companies that retain the label of "technology" but whose operations have stagnated remain in the index for extended periods. Such industry misalignment not only undermines the representativeness of the index but also diverts passive fund allocations away from the main trajectory of technological advancement. This reform eliminates industry requirements and instead selects stocks based on six technology themes: digital platforms and solutions, artificial intelligence, advanced hardware, robotics and automation, cloud computing, and frontier technologies. The number of technology sub-themes has also expanded from 16 to 24. This theme-based stock selection logic more accurately identifies enterprises that genuinely drive technological progress, regardless of their registered industry.
Improvements in the stock selection mechanism are equally commendable. The number of constituent stocks will increase from 30 to 50. The selection scope has been narrowed to constituents of the Hang Seng Composite Large-Mid Cap Index, with added liquidity requirements to ensure sufficient investability of the constituents. The newly introduced "Revenue Growth Category" provides an inclusion opportunity for 10 high-growth mid-sized technology companies, breaking the previous limitation of market-cap-only selection. This not only broadens the index's coverage but also offers early exposure to quality candidates with potential to become leading enterprises, thereby enhancing the index's long-term growth potential. From a structural perspective, the existing 30 constituents are retained, accounting for approximately 90% of the weight, while the 20 new additions collectively account for about 10%. This ensures manageable rebalancing pressure on existing tracking products and a smooth transition.
As the core benchmark for Hong Kong's technology sector, the optimization of the Hang Seng Tech Index impacts not only the index itself but also Hong Kong's competitiveness as an international financial center in the field of technology financing. The reformed index is closer to industrial reality, helping attract more passive and active funds to allocate to Chinese technology assets through the Hang Seng index series. As of September 30, 2026, the total asset management value of products passively tracking the Hang Seng index series was approximately USD 105.5 billion, and the asset size tracking the Hang Seng Tech Index has grown from USD 1.5 billion at its launch in 2020 to USD 37.1 billion. Continuous capital inflows reflect market endorsement of the reform direction.
In summary, this reform represents the most industry-reflective revision of the Hang Seng Tech Index since its launch in 2020. The shift from industry labels to technology themes and from single market-cap-based selection to dual-category selection is correctly oriented and pragmatically executed. As the December adjustment takes effect, investors should pay attention to potential inclusion candidates in fields such as artificial intelligence, advanced hardware, and robotics automation that meet revenue growth and liquidity requirements. The medium- to long-term allocation value of the Hang Seng index series warrants continuous monitoring. Chairman of the Hong Kong Securities Analysts Association, Executive Partner at Ebro Capital Asia Limited, Tang Sheng Hing
*Articles published in 《ETNet》, whether signed or unsigned, represent the authors' personal opinions and do not reflect the stance of 《ETNet》. The role played by 《ETNet》is to provide a free forum platform.
Previously, the Hang Seng Tech Index selected stocks based on five designated industries under the Hang Seng Industry Classification System. This approach, however, has become increasingly inadequate amid the blurring boundaries of the technology industry. Numerous companies with genuine technological attributes are excluded because their primary business is classified under traditional industries. Conversely, some companies that retain the label of "technology" but whose operations have stagnated remain in the index for extended periods. Such industry misalignment not only undermines the representativeness of the index but also diverts passive fund allocations away from the main trajectory of technological advancement. This reform eliminates industry requirements and instead selects stocks based on six technology themes: digital platforms and solutions, artificial intelligence, advanced hardware, robotics and automation, cloud computing, and frontier technologies. The number of technology sub-themes has also expanded from 16 to 24. This theme-based stock selection logic more accurately identifies enterprises that genuinely drive technological progress, regardless of their registered industry.
Improvements in the stock selection mechanism are equally commendable. The number of constituent stocks will increase from 30 to 50. The selection scope has been narrowed to constituents of the Hang Seng Composite Large-Mid Cap Index, with added liquidity requirements to ensure sufficient investability of the constituents. The newly introduced "Revenue Growth Category" provides an inclusion opportunity for 10 high-growth mid-sized technology companies, breaking the previous limitation of market-cap-only selection. This not only broadens the index's coverage but also offers early exposure to quality candidates with potential to become leading enterprises, thereby enhancing the index's long-term growth potential. From a structural perspective, the existing 30 constituents are retained, accounting for approximately 90% of the weight, while the 20 new additions collectively account for about 10%. This ensures manageable rebalancing pressure on existing tracking products and a smooth transition.
As the core benchmark for Hong Kong's technology sector, the optimization of the Hang Seng Tech Index impacts not only the index itself but also Hong Kong's competitiveness as an international financial center in the field of technology financing. The reformed index is closer to industrial reality, helping attract more passive and active funds to allocate to Chinese technology assets through the Hang Seng index series. As of September 30, 2026, the total asset management value of products passively tracking the Hang Seng index series was approximately USD 105.5 billion, and the asset size tracking the Hang Seng Tech Index has grown from USD 1.5 billion at its launch in 2020 to USD 37.1 billion. Continuous capital inflows reflect market endorsement of the reform direction.
In summary, this reform represents the most industry-reflective revision of the Hang Seng Tech Index since its launch in 2020. The shift from industry labels to technology themes and from single market-cap-based selection to dual-category selection is correctly oriented and pragmatically executed. As the December adjustment takes effect, investors should pay attention to potential inclusion candidates in fields such as artificial intelligence, advanced hardware, and robotics automation that meet revenue growth and liquidity requirements. The medium- to long-term allocation value of the Hang Seng index series warrants continuous monitoring. Chairman of the Hong Kong Securities Analysts Association, Executive Partner at Ebro Capital Asia Limited, Tang Sheng Hing
*Articles published in 《ETNet》, whether signed or unsigned, represent the authors' personal opinions and do not reflect the stance of 《ETNet》. The role played by 《ETNet》is to provide a free forum platform.
