Reshuffle may see Minsheng join HSCEI

09:08, February 05, 2010      

Email | Print | Subscribe | Comments | Forum 

China Minsheng Banking Corp may be among companies added to Hong Kong's Hang Seng China Enterprise Index (HSCEI) in a reshuffle that will see the gauge's overall membership reduced to 40 companies, Nomura Holdings Inc and BNP Paribas SA said.

Hang Seng Indexes announced in November that it was revising the criteria for inclusion in many of its gauges. While the membership of the benchmark Hang Seng Index should remain unchanged, the changes to the China Enterprises Index, which tracks H shares of Hong Kong-listed mainland companies, will result in significant changes, the brokerages said.

"The impact on the HSCEI is more substantial, as the announced changes comprise both areas of index design, including calculation methodology, and the stock selection criteria," said Nomura analysts led by Sandy Lee. "By applying the new methodology, we estimate there are six potential additions and 10 potential deletions."

The amendments may prompt investors that buy shares based on the index to adjust their holdings. The results of the latest review will be released today, and will take effect from March 8. BNP analysts Winner Lee and Anthony Wong estimate eight companies will be deleted to make way for four new members.

Comings and goings

The brokerages both said Minsheng Bank, the mainland's first privately owned lender, is likely to be joined by Metallurgical Corporation of China Ltd, a construction and engineering company, and Sinopharm Group, the country's largest drug distributor, in the China Enterprises Index.

Among the companies likely to be deleted from the gauge are Jiangsu Expressway Co, Harbin Power Equipment Co, Sinopec Shanghai Petrochemical Co, Maanshan Iron & Steel Co, Beijing Capital International Airport Co, China Communication Services Corp, China Shipping Container Lines Co and China Molybdenum Co, the brokerages said.

Changes to how the H-share index is compiled include capping the maximum weighting of index members at 10 percent instead of 15 percent. China Construction Banking Corp, Industrial & Commercial Bank of China Ltd and Bank of China Ltd will suffer the heaviest changes as a result of the weighting cut, the brokerages said.

"There are currently 116 H shares on the Hong Kong Main Board, and our analysis showed 40 members are able to cover more than 90 percent of the shares' market value," said Elaine Lam, an index analyst at Hang Seng Indexes Co.

Additionally, Nomura said Zhejiang Expressway Co and Shanghai Electric Group, an electrical equipment manufacturer, could also be removed. ZTE Corp, am electronics manufacturer, Weichai Power Co, an engine maker, and China South Locomotive & Rolling Stock Corp may be added, the brokerage said.

BNP's analysts said BBMG Corp, which makes and sells building materials, was a possible new addition.

Source: China Daily
  • Do you have anything to say?


Special Coverage
Major headlines
Editor's Pick
  • All about the Year of the Tiger
  • Eileen Chang's novel to be a TV drama
  • Lucky 15,000-kg 'rice tortoise' completed in Quanzhou
  • Washington's beloved panda Tai Shan to fly home in China
  • Gorgeous first ladies - women behind world politicians
  • Cobra Gold multinational military exercise held in Thailand
Most Popular
Hot Forum Dicussion