On May 18, 2020, Hang Seng Indexes published the conclusions to its consultation regarding the eligibility of WVR companies and secondary-listed companies for inclusion in the Hang Seng Index (HSI) and the Hang Seng China Enterprises Index (HSCEI) as well as various other matters related to the HSI and the HSCEI.

WVR companies and secondary-listed companies from the Greater China region will be included in the HSI and the HSCEI under the following conditions:

  • Shares with WVR structures will be considered non-freefloat shares.
  • Market capitalization of secondary-listed companies will be based solely on the shares registered in Hong Kong. Any of these shares held by a depositary as underlying for overseas depositary receipts will be considered non-freefloat shares.
  • Individual constituent weighting of the securities of WVRs and secondary-listed companies will be subject to a 5% weighting cap.

Also, to align the HSCEI constituent selection criteria for all share classes, the existing additional eligibility criteria (including listing history, price volatility and financial performance) introduced in 2018 for red-chip and P-chip companies will be removed. The number of constituent changes in the August 2020 HSCEI index review will be capped at three to control the index turnover at a manageable level. This restriction will be removed starting in the November 2020 index review.

No change will be made to the current positioning of the HSI. The HSI will continue to represent the Greater China companies listed in Hong Kong, and no specific ratio or weighting limits will be set for Hong Kong versus Mainland China constituents or financial stocks. Market representativeness will continue to be the main consideration for any changes in HSI constituents.

The above changes will be implemented starting in the August 2020 index review.