Asia continues to lag other regions for integrating ESG principles with investing; better data and stronger regulatory requirements will help institutional investors, market observers say.
One similar index already exists: the MSCI Broad China Index, which includes A-shares as well as red-chips, H-shares and other international listings of mainland entities.
Other global vendors such as FTSE (via the FTSE Xinhua series), Dow Jones Indexes and Standard & PoorÆs offer separate indices for mainland versus China-related companies listed in Hong Kong or international markets, which include red-chips and H-shares. To date these donÆt have a single index that merges mainland and international markets û and the new Hang Seng index does not include Shenzhen-listed counters either.
The Hang Seng China 50 picks constituents based on aggregate market cap of all classes of shares, using a free-float adjusted calculation methodology with a 15% cap on the aggregate weightings of individual constituent companies.
Vincent Kwan, director and general manager at Hang Seng Indexes, says the China 50 should appeal to QFII and QDII investors, as well as serve as the base for derivative products or exchange-traded funds seeking a broad China exposure.
The US dollar-denominated indexÆs real-time calculations will officially begin on 30 June (the Hong Kong dollar- and renminbi-denominated calculations are done at the end of the day), with historic trading data backdated to 3 January 2000.
In addition, Hang Seng Indexes is preparing to introduce two more products. First, it will introduce a series of short and leveraged versions of the Hang Seng Index and the Hang Seng China Enterprises Index. These are designed to replicate the payoff of a short or leveraged portfolio. The short index will provide the inverse daily performance of the underlying index, while the leveraged version will suggest an amplified daily performance û which the provider hopes will prove popular for creating new ETFs.
Secondly, it plans to introduce a Hong Kong Reit index later this year to track the seven locally listed real-estate investment trusts, the first of which was listed on the Hong Kong Stock Exchange in 2005.
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