In "Big Banks," CICC predicts that Zijin Mining, BeiGene, property insurance, and Akeso may "replace" Hang Seng Bank in Standard Chartered's "blue" category

CICC published a report stating that after the market closes on February 13 (Friday), the Hang Seng Index Company will announce the annual review results of the Hang Seng series indices, involving major flagship indices of Hong Kong stocks such as the Hang Seng Index, the Hang Seng China Enterprises Index, and the Hang Seng Tech Index, as well as the Hang Seng Composite Index, which directly affects the investment scope of the Hong Kong Stock Connect.

Due to the significant changes typically seen in the annual review and the large scale of passive funds tracking flagship indices (according to comprehensive market statistics, the ETF sizes tracking the Hang Seng Index, the Hang Seng China Enterprises Index, and the Hang Seng Tech Index are approximately USD 30.4 billion, USD 9.11 billion, and USD 47.68 billion respectively), potential changes in constituent stocks and corresponding fund flows are worth paying close attention to. Based on the currently available data, the bank predicts the potential adjustments as follows: Hang Seng Index adjustments: Zijin Mining International (02259.HK), Yum China (09987.HK), BeiGene (06160.HK), etc., meet the inclusion criteria.

After the delisting of Hang Seng Bank (00011.HK), some Hong Kong companies may "supplement" the index. Based on the adjustment methodology of the Hang Seng Index and the verification of subjective adjustment standards through previous actual adjustment results, the bank calculates that Zijin Mining International, BeiGene, Yum China, XPeng-W (09868.HK), China Pacific Insurance (02328.HK), AKESO (09926.HK), China Taiping Insurance (02601.HK), and Laoputang Gold (06181.HK) rank among those meeting the inclusion criteria and are at the forefront of the potential candidate list. The bank's calculations prioritize market capitalization rankings, combined with factors such as industry representation and coverage, to derive the possible weights and fund flows for the respective stocks.

However, it should be specifically noted that historical experience indicates that actual results often deviate from this ranking based on quantitative standards. For example, Yum China and BeiGene have ranked highly in previous predictions but ultimately were not included. This is mainly because some inclusion criteria for the Hang Seng Index lack explanation or quantitative basis, such as industry and listing location representation, which involve subjective judgment factors.

In addition, the original constituent stock of the Hang Seng Index, Hang Seng Bank, will be privatized and delisted from the Hong Kong market on January 27, thus Hang Seng Bank was removed from the Hang Seng Index and various classification indices after the market closed on January 14. Considering that the Hang Seng Index compilation rules clearly state that the index will retain at least 20 constituent stocks recognized as Hong Kong companies, this number will be reviewed at least every two years, and there is a possibility that other Hong Kong companies may be "supplemented" into the Hang Seng Index this time. Considering factors such as market capitalization rankings and industry coverage, CICC estimates that Standard Chartered Group (02888.HK), (01972.HK), and Xincheng (00083.HK) rank at the forefront, but whether they will be included in this "supplement" remains uncertain.

Regarding adjustments to the Hong Kong Stock Connect: CICC expects that 44 stocks, such as JD Industrial (07618.HK) and Innovation Industry (02788.HK), are likely to be included; Nanhua Futures (02691.HK) will also be included after the price stabilization period; 25 stocks, such as Youbao Online (02429.HK) and Auto Street (02443.HK), may be removed. This coincides with the annual review of the Hang Seng Composite Index (which undergoes two regular adjustments per year, with June 30 and December 31 as the cutoff calculation dates) Since the Hang Seng Composite Index is the sample space for Hong Kong Stock Connect investments, its changes will directly affect the investable range of Hong Kong Stock Connect. It is important to note that this year, the Hang Seng Index Company has optimized its calculation method for the average market capitalization of the sample over the past 12 months and the sorting method for long-term suspended stocks in its index review.

In terms of timing, the Hang Seng Index Company will announce the official results of the Hang Seng series index adjustments after the market closes on February 13, and the adjustments will be officially implemented on March 9 (Monday). After the index adjustments take effect on March 9, the Shanghai and Shenzhen Stock Exchanges will subsequently adjust the investable range of the Shanghai-Shenzhen-Hong Kong Stock Connect based on this (specific timing will depend on the announcements from the exchanges)