BANK of Communications Ltd (stock code:601328), part owned by HSBC Holdings Plc, will become the latest mainland company to join Hong Kong's Hang Seng Index, HSI Services Ltd said.
The change will take place after the market closes on September 7, HSI Services, which compiles the city's stock indexes, said in a statement posted on its Website. The entry will expand the Hang Seng Index's membership to 40.
The addition of companies incorporated on the Chinese mainland, known as H shares, reflects their growing importance in Hong Kong.
H shares at the end of July accounted for 25 percent of the value of the 1,031 stocks listed on the Hong Kong stock exchange's main board, up from 1.5 percent at the end of 1997, the bourse's Website shows.
Changes to the Hang Seng Index will prompt funds that mirror the benchmark, such as the HK$27 billion (US$3.5 billion) Tracker Fund of Hong Kong, to adjust their holdings, according to Bloomberg News.
New cap
Along with the addition of the Bank of Communications, the representation of companies on the Hang Seng Index will be capped at 15 percent, down from a current ceiling of 20 percent, according to the statement.
The new limit will mean that HSBC Holdings Plc's weighting will be cut to that level, and China Mobile Ltd's to 12 percent, the statement said.
HSBC, Europe's biggest bank, accounts for 18 percent of the Hang Seng Index, while China Mobile, the world's largest mobile phone operator by users, makes up 17 percent of the measure, HIS Services said.
Shares of mainland companies have been eligible for inclusion in the Hang Seng Index since August 2006, and so far six have joined.
China Construction Bank Corp, the country's third-biggest lender, Bank of China Ltd, the second largest, and China Petroleum & Chemical Corp, the nation's No. 1 refiner, were all made members in 2006.
The Industrial & Commercial Bank of China Ltd (stock code:), China Life Insurance Co(stock code:601628) and Ping An Insurance (Group) Co (stock code:601318) were added to the market indexthis year.
HSI Services said earlier that the benchmark will gradually be expanded to 50 members.