Single index for Hong Kong and mainland China
Andrew Wood | Tuesday, 17 June 2008
FT Syndication Service
HONG KONG: Hang Seng Indexes has said it will launch a cross-market China index to measure the performance of shares of the country's 50 biggest companies, whether they are listed in Hong Kong or on the stock exchanges of Shanghai or Shenzhen.
The index provider said it would start publishing the Hang Seng China 50 index in real time from June 30. It hopes to simplify the process of assessing Chinese companies, which has been complicated by the "one country, two systems" legacy of the 1997 Hong Kong handover.
Many mainland companies, such as PetroChina, are listed in Hong Kong and Shanghai with two different classes of shares that often move in opposite directions, while most Hong Kong companies with businesses on the mainland do not have listings there. The issue is further muddied by different currencies: the renminbi for Shanghai and Shenzhen, and the Hong Kong dollar.
Vincent Kwan, director and general manager of Hang Seng Indexes, said: "A full assessment of the performance of listed China companies involves consideration of different markets and classes of shares."
Demand for a cross-market barometer had increased with the emergence of Qualified Foreign Institutional Investors (QFII) - foreign fund managers licensed to trade mainland shares; and Qualified Domestic Institutional Investors (QDII), who can buy shares in Hong Kong and abroad.
Mr Kwan hoped the China 50 would provide a benchmark for derivatives, QDII and QFII portfolios, and exchange-traded funds that aim for China exposure.
Jing Ulrich, chairman of China equities at JPMorgan Securities in Hong Kong, said: "It's a natural progression." With portfolio managers investing money in all three stock markets simultaneously, she said there was a need for better ways of measuring performance.
"Benchmarks have to reflect the reality of the market, and as far as current benchmarks go, the mainland and the Hong Kong markets have been segregated. But given the increasing linkages and fund flows between them, it makes sense to have such an index."
HONG KONG: Hang Seng Indexes has said it will launch a cross-market China index to measure the performance of shares of the country's 50 biggest companies, whether they are listed in Hong Kong or on the stock exchanges of Shanghai or Shenzhen.
The index provider said it would start publishing the Hang Seng China 50 index in real time from June 30. It hopes to simplify the process of assessing Chinese companies, which has been complicated by the "one country, two systems" legacy of the 1997 Hong Kong handover.
Many mainland companies, such as PetroChina, are listed in Hong Kong and Shanghai with two different classes of shares that often move in opposite directions, while most Hong Kong companies with businesses on the mainland do not have listings there. The issue is further muddied by different currencies: the renminbi for Shanghai and Shenzhen, and the Hong Kong dollar.
Vincent Kwan, director and general manager of Hang Seng Indexes, said: "A full assessment of the performance of listed China companies involves consideration of different markets and classes of shares."
Demand for a cross-market barometer had increased with the emergence of Qualified Foreign Institutional Investors (QFII) - foreign fund managers licensed to trade mainland shares; and Qualified Domestic Institutional Investors (QDII), who can buy shares in Hong Kong and abroad.
Mr Kwan hoped the China 50 would provide a benchmark for derivatives, QDII and QFII portfolios, and exchange-traded funds that aim for China exposure.
Jing Ulrich, chairman of China equities at JPMorgan Securities in Hong Kong, said: "It's a natural progression." With portfolio managers investing money in all three stock markets simultaneously, she said there was a need for better ways of measuring performance.
"Benchmarks have to reflect the reality of the market, and as far as current benchmarks go, the mainland and the Hong Kong markets have been segregated. But given the increasing linkages and fund flows between them, it makes sense to have such an index."