The Hang Seng TECH Index is actively embracing hard technology.
On the evening of August 10, Hang Seng Indexes Company issued a consultation paper stating that the composition of Hong Kong's technology sector continues to expand, with faster-growing revenue companies often having smaller market capitalizations. To enhance the market representation of the Hang Seng TECH Index, they are seeking market opinions on the index revision proposal.
The key points of this reform include: fully removing industry restrictions; revising six technology themes; introducing a dual-track stock selection mechanism based on market capitalization and revenue growth; and expanding the number of constituent stocks from 30 to 50.
"The Hang Seng Index has been under significant pressure over the past six months, missing out on the gains brought by the global AI (Artificial Intelligence) surge," a source close to Hang Seng Indexes Company told Caijing. "This is just the first step of the reform, starting with the consultation paper. We will see how the market responds next."
According to simulation calculations by Hang Seng Indexes Company, among the 50 constituent stocks of the revised Hang Seng TECH Index, the number of stocks related to advanced hardware and artificial intelligence would increase from the current 5 and 3 to 15 and 6, respectively.
The results of this revision are expected to be announced by the end of September, with changes to the constituent stocks taking effect on the official index adjustment date in December. If the plan is ultimately approved, this would be the most significant and systematic structural reform of the Hang Seng TECH Index since its launch in 2020.
As of the end of June 2026, the global fund assets tracking this index have reached US$40.4 billion. Any changes to the constituent list and weights will trigger large-scale passive fund rebalancing, and its impact on Hong Kong's technology sector extends far beyond technical adjustments to index compilation.
1
Changes in Hong Kong's Tech Ecosystem
Looking back to July 2020, the Hang Seng TECH Index was officially launched, with the original intention of providing global investors with a tool to track the overall performance of Hong Kong-listed technology companies, selecting the 30 largest technology firms by market capitalization. Today, the Hang Seng TECH Index has grown into one of the most influential flagship indices in the Hong Kong stock market, with tracking assets increasing from an initial US$1.5 billion to US$40.4 billion, a nearly 26-fold increase.
Although the index's market status has grown, its representative capacity has not kept pace with the dramatic changes in Hong Kong's technology ecosystem. In the past, because the Hang Seng TECH Index has been highly concentrated in the Network and E-commerce themes since its inception, the weights of internet platform companies such as Tencent, Meituan, and Alibaba have long dominated. The index's fluctuations were largely tied to the outcomes of food delivery subsidy wars, e-commerce promotional season data, and even the approval rhythm of game licenses.
The scope of technology investment in Hong Kong continues to expand. Over the past few years, Hong Kong has welcomed a batch of companies in artificial intelligence, semiconductors, robotics, and specialized technology, with enterprises listed under the HKEX's new Chapter 18C rules also increasing. However, these companies generally have short listing histories and small market capitalizations, systematically excluded by the market capitalization threshold.
According to Hang Seng Indexes Company data, at the end of 2021, the Network theme had the highest share among Hong Kong tech stocks, accounting for 37.3%. By the first half of 2026, Network's share had dropped to 25.0%, surpassed by Intelligent Transformation at 32.1%.
Furthermore, within Hong Kong's technology sector, companies with stronger revenue growth tend to have smaller market capitalizations. Hang Seng Indexes Company data shows that the median revenue growth of current Hang Seng TECH Index constituents is significantly lower than that of smaller-cap, non-constituent companies.
Currently, the Hang Seng TECH Index has included two major AI listed companies, but this has not impacted the heavyweight stocks. The latest Hang Seng TECH Index changes effective on June 8 included MiniMax and Zhipu AI, with a combined weighting of less than 1%.
2
What Impact Will the Two Major Revision Proposals Have?
The revision proposals for the Hang Seng TECH Index involve structural adjustments around two dimensions.
The first is expanding the coverage of technology themes. Specific suggestions include: removing industry requirements, as technological innovation has integrated into all industries and is not limited by traditional sector classifications; revising six major technology themes to cover Digital Platforms & Solutions, Artificial Intelligence, Advanced Hardware, Robotics & Automation, Cloud, and Frontier Technology. Additionally, expanding the number of technology sub-themes under the six major themes from 16 to 24.
Source: Hang Seng Indexes Company website
The second is introducing a grouping selection mechanism. Hang Seng Indexes Company proposes that the stock selection scope for the Hang Seng TECH Index be limited to constituents of the Hang Seng Composite LargeCap & MidCap Index, while introducing a grouping selection mechanism. Selection will proceed via a dual-track system based on "Market Capitalization Group" and "Revenue Growth Group," and the number of constituent stocks will increase from 30 to 50. Specifically, the top 40 will be selected by market capitalization ranking, and the top 10 will be selected by revenue growth ranking.
Source: Hang Seng Indexes Company website
According to simulation results released by Hang Seng Indexes Company, the revision will bring three major impacts on index characteristics.
First, index concentration will decrease slightly. Hang Seng Indexes Company simulation results show that the weight of the top ten constituents will drop from the current 70.6% to 66.3%, dispersing the index's exposure to leading companies somewhat.
Second, the distribution of technology themes will become more diverse. Under the new thematic framework, the number of constituents related to "Advanced Hardware" will increase from 5 to 15, and those related to "Artificial Intelligence" will increase from 3 to 6. Newly added themes like "Frontier Technology" will also gain inclusion space, significantly broadening the index's coverage of technology attributes.
Finally, the Revenue Growth Group will introduce high-growth targets. Simulation results show that the 10 new constituent stocks added via the "Revenue Growth Group" have a median revenue growth rate as high as 82%, higher than the 23.4% for those added via the "Market Capitalization Group," and far exceeding the 13.8% revenue growth rate of existing constituents.
This article is from the WeChat public account "Read One Insight" (ID: dushuyizhi007), author: Cheng Mengqi, editor: Guo Nan.
