Baidu, other Chinese tech names may join Hang Seng in reshuffle

[HONG KONG] Chinese Internet giant Baidu is among stocks that analysts say could be added to the Hang Seng Index in the ongoing reshaping of Hong Kong's benchmark gauge.

Most of the candidates are expected to be so-called "new economy" plays as index compiler Hang Seng Indexes Co looks to expand the number of components while reducing the proportion of financial and property shares.

Baidu, Nongfu Spring Co and Genscript Biotech are potential additions in the latest review, according to Bloomberg Intelligence analyst Marvin Chen. The results are set to be announced Friday (Feb 18) evening local time.

"The tech, healthcare and consumer sectors may remain the focus of Hang Seng Index inclusions going forward, with all 3 industries expected to net-add 4 to 6 names," Chen wrote in a note Wednesday.

The Hang Seng Index, which currently comprises 64 stocks, has gained nearly 6 per cent this year and is among Asia's top performing benchmarks. Investors in Hong Kong have snapped up local shares recently due to attractive valuations and a perceived easing of China's regulatory crackdowns.

Other possible new inclusions in the benchmark are JD Health International, Smoore International, Semiconductor Manufacturing International Corp and China Gas Holdings, according to China International Capital. Analysts at the firm including Wang Hanfeng expect as many as eight stocks could be added during this review.

Hang Seng Indexes Co in March 2021 announced the biggest-ever overhaul of its benchmark gauge, looking to boost the number of members to 80 by mid-2022. Other recent reviews saw the inclusion of new economy names including BYD Co, JD.com and NetEase. BLOOMBERG