Shares of technology companies listed in Hong Kong saw a significant rally Tuesday, following an announcement from the Hang Seng Indexes Company that it will launch a tech index to track the main technology players listed at the HK stock market.
The HSCIIT index, a sub index compiled by Hang Seng to track the information technology industry, was up 5 percent Tuesday morning. Alibaba, which is to be included in the new tech index, saw its share price jump over 5 percent Tuesday morning. Shares of Chinese internet giant Tencent also rose 5 percent.
The Hang Seng Indexes Company Monday announced its plan to launch the new index, in which it will include the 30 largest technology companies listed on the Hong Kong Stock Exchange.
Alibaba, Tencent, Meituan and Xiaomi will be the biggest players, accounting for over 33 percent of the index weighting.
The tech index is expected to shore up market investment interest in technology stocks, according to investment bank Citigroup. The total turnover of the Hong Kong Stock Exchange will be boosted accordingly.
Citigroup has recommended investment in sectors related to technology in the second half of 2020, which would include companies such as Alibaba, Sino Biopharmaceutical and Alihealth.
Many of the Chinese companies listed in Hong Kong have been growing exponentially, taking up an increasingly large share in market capitalization and turnovers.
Companies from the Chinese mainland make up more than half of all firms listed in Hong Kong. Among the 2,487 listed companies, 1,265 are from the mainland, accounting for 78 percent of total market capitalization.
The launch of the new index will be positive for technology companies, Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, told the Global Times, adding that it will also encourage more companies from the mainland to list as tensions between China and the US rise.
"The index is showing strong indication that there is an increasing number of technology companies being listed in Hong Kong and that they are doing extraordinarily well," Dong said. "With the wave of returning Chinese stocks amid US-China tensions, it is safe to say investors will begin to shift their attention further from New York toward the Hong Kong market."
Ant Group, an affiliate of Alibaba which runs Alipay, Monday announced its plan to list in Shanghai and Hong Kong. The dual IPO could be valued at $200 billion.
Chinese ride-hailing giant Didi Chuxing is also reportedly eyeing an IPO in Hong Kong later this year, targeting a valuation of $80-100 billion.
