The remaining three indices, the S&P/HKEx MidCap, SmallCap and Composite indices, will be launched later in the year.
The S&P/HKEx LargeCap index comprises 25 stocks covering approximately 75 per cent of the Hong Kong market. The S&P/HKEx GEM index is designed to represent the Growth Enterprise Market (GEM) and consists of stocks that meet strict liquidity guidelines.
"Standard & Poor's has built relationships with local exchanges across North America, Europe and Asia-Pacific, combining our global indexing capabilities with local market expertise," said Glenn Doody, Vice President, Standard & Poor's. "Together with Hong Kong Exchanges and Clearing (HKEx), Standard & Poor's will offer indices that are representative, liquid and investable, and that are designed to elevate Hong Kong companies as investment opportunities for both local and international investors."
The S&P/HKEx LargeCap index will include large international companies, such as HSBC and China Mobile, listed in Hong Kong. The weight of large companies will be capped to ensure a well diversified and balanced representation of the Hong Kong market. In addition, securities known as Red Chips and H-Shares will also be included in the S&P/HKEx series of indices.
"Recognizing that Mainland China-domiciled companies represent an important part of the Hong Kong market and investor portfolios, Standard & Poor's includes H-Shares in the universe of stocks eligible for the S&P/HKEx indices to fully capture the characteristics of this market," added Mr. Doody.
Mr. Roger Lee, HKEx's Senior Vice President of E-Business and Information Services said, "We are very pleased with the launch of the S&P/HKEx index series which we hope will provide Hong Kong and international market participants with an alternative for investable and benchmark index series covering Hong Kong, Mainland and global companies listed in Hong Kong."
Criteria for index inclusion include market capitalization, liquidity, industry or sector representation, and on-going viability demonstrated consistently by positive earnings. Size measurements will be based on market capitalization. Liquidity measurements will be based on trading activity on the Stock Exchange of Hong Kong. The S&P/HKEx indices are free-float adjusted, highly liquid and sector balanced, and apply the Global Industry Classification Standard (GICS) to each constituent company. The use of GICS enables investors using the S&P/HKEx indices to make sector and industry comparisons with other markets worldwide.
The S&P/HKEx indices will be maintained by an S&P Index Committee comprised of representatives of both Standard & Poor's and HKEx, with the majority of representation from Standard & Poor's. The S&P Index Committee Chairman will be appointed by Standard & Poor's. For more information about inclusion criteria and index methodology, please visit Standard & Poor's website www.standardandpoors.com.
