Hang Seng TECH revamp opens index to smaller growth companies

The benchmark's new composition takes effect on 7 December.

Hong Kong's Hang Seng TECH (HSTECH) Index is expanding its coverage of listed technology companies to better reflect growth in artificial intelligence, robotics and advanced hardware, as the market moves beyond its traditional focus on internet and e-commerce businesses.

"We want to make sure the most successful index in Hong Kong's HSTECH Index to remain representative, to remain relevant, and to remain the ability to be invested by capital," Gilbert Lee, Executive Chairman of Hang Seng Indexes Company Limited, Vice-Chairman of Hang Seng Bank (China) Limited, said at the Asian Banking & Finance and Insurance Asia summit in Hong Kong on 5 November.

The changes follow a shift in Hong Kong's technology market, where the number of listed technology companies has nearly doubled over the past six years.

According to Lee, the number of technology stocks listed in Hong Kong has increased from around 140 to 271, supported by new listings and greater investor interest in emerging technologies.

The representative said Hong Kong had recorded 48 new technology initial public offerings so far in 2026, with further growth expected. Hang Seng Indexes Company Limited will also increase the number of constituents in the HSTECH Index from 30 to 50.

Under the revised selection process, 40 companies will be chosen based on market capitalisation, whilst another 10 will be selected according to revenue growth.

The new approach is designed to include faster-growing companies that might otherwise be excluded because of their smaller market values.

Lee said larger technology companies in the existing index recorded median revenue growth of approximately 13.8%, compared with nearly 20% amongst smaller technology companies outside HSTECH constituents

The index compiler projects that the median revenue growth of constituent companies will increase from 13.8% to 21.3% under the revised methodology.

The changes are also expected to increase the index's coverage of Hong Kong-listed technology companies by market capitalisation from approximately 85% to more than 90%.

The revised index will cover six technology themes: digital platforms and solutions, artificial intelligence, advanced hardware, robotics and automation, cloud, and frontier technologies.

The company is also removing existing industry restrictions, allowing companies operating in emerging technology fields to qualify regardless of their traditional sector classification.

However, eligible companies must still meet market capitalisation and trading requirements to ensure that investment funds can buy and sell their shares without causing excessive price movements.

According to Lee, over $30b in assets track thetrack the HSTECH Index Series, making liquidity an important consideration when selecting new constituents.

"If we include companies that are too small, imagine you have $30b chasing these equities," Lee said.

The concern is that including companies with limited daily trading activity could expose investors to significant price fluctuations when large funds adjust their holdings.

The expansion comes amidst pressure on Hong Kong's technology benchmark. An October 2026 report by Caixin Global found that the index had declined approximately 24% since the beginning of the year, whilst assets tracking the benchmark reached approximately $37.1b as of September. The report also confirmed that the new 50-stock index will take effect on 7 December 2026, with its constituent list scheduled for release on 20 November.

Beyond changes to its index methodology, Hang Seng Indexes Company Limited is using artificial intelligence (AI) to improve how it calculates and maintains its benchmarks.

One application involves determining the proportion of a listed company's shares available for public trading, excluding holdings controlled by major shareholders or subject to trading restrictions. Previously, employees had to review annual reports, company announcements and exchange filings to calculate these figures manually.

The company has introduced an AI system to process these documents and extract the required information.

"We can cover all the soft over 2600 listed companies in Hong Kong. We can also calculate it more frequently on a monthly basis," Lee said.

The system has reduced the workload associated with these calculations by approximately one-third, whilst allowing the company to update information more frequently.

The company's next step will be to introduce the revised TECH Index constituents in December whilst continuing discussions with asset managers on commercialising artificial intelligence-assisted index products.