Staff Reporter
Published:
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The HSTECH will expand from 30 to 50 constituents in December.
The number of technology companies listed in Hong Kong has increased by more than 80% since 2020, as Hang Seng Indexes Company (HSIL) prepares to revise the methodology of its Hang Seng TECH Index (HSTECH).
The city recorded 271 listed technology companies as of end-August, up from 146 in 2020, according to HSIL's report on 7 October.
Information technology initial public offerings reached 48 in the first eight months, compared with 24 for the whole of 2025.
HSIL will expand the index from 30 to 50 constituents and introduce other changes following a month-long market consultation launched in August.
Under the revised selection mechanism, HSIL will select 40 constituents based on market capitalisation, while choosing the remaining 10 based on sales growth over the preceding 12 months.
Despite the increase in listed companies, the technology sector's share of the city's total market capitalisation remained broadly stable at 44%.
"This suggests that expanding HSTECH beyond its current 30 constituents could provide broader market representation," HSIL said.
The report also highlighted changes in the composition of the sector.
Internet and e-commerce companies accounted for a combined 31.3% of the city's listed technology universe by number of stocks as of June, down from 53.7% at the end of 2021.
Meanwhile, the Autonomous technology theme's share increased from 9.0% to 32.1%, whilst the Digital theme rose from 13.4% to 18.8% over the same period.
HSIL will revise the index's six technology themes to cover Digital Platforms & Solutions, Artificial Intelligence, Advanced Hardware, Robotics & Automation, Cloud, and Frontier Technologies.
The number of technology sub-themes will also increase from 16 to 24, including new areas such as AI Infrastructure, Quantum Computing, New Energy Storage, and Materials.
The revised methodology will remove existing sector requirements but limit eligible companies to constituents of the Hang Seng Composite LargeCap & MidCap Index.
HSIL said the change addresses liquidity considerations, as assets under management in exchange-traded products tracking HSTECH increased from $11.77b (US$1.5b) in 2020 to $291.16b (US$37.1b) as of September.
"Including a company with a small market capitalisation or low daily turnover could make it difficult for funds to track the index efficiently," the report said.
New additions will be subject to liquidity requirements, including a three-month average daily turnover of at least $100m. Firms selected through the sales-growth stream must also have recorded at least $500m in sales in each of their two most recent financial years.
Based on a simulation using second-quarter index review data, HSIL estimated that the revisions would increase HSTECH's market capitalisation coverage of the technology-theme universe from 85% to 91%.
The index's median constituent sales growth could also rise from 14% to 21% under the revised selection mechanism.
The changes will be implemented in the index review for the period ended 30 September, with resulting constituent adjustments taking effect at the December rebalancing.
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