Hong Kong’s financial markets were not anything like the protests on the streets. In fact, they have been thriving – Hong Kong Exchanges and Clearing share price has been up by 45% this year. Few days ago, Hang Seng Indexes Company (a subsidiary of Hang Seng Bank) introduced the Hang Seng Tech Index to track the technology stocks listed in Hong Kong.
This seems like a timely move as Chinese companies feared they may be forced to delist from US exchanges. Alibaba, JD and NetEase have secondary listings on Stock Exchange of Hong Kong (SEHK) to hedge against this possibility. Hang Seng Tech Index is a new home to Chinese tech companies and has the potential be a NASDAQ equivalent in the east. This is a testament of tech’s increasing clout and a further proof of a digital iron curtain between US and China.
Hang Seng Tech Index is made up of 30 stocks that were chosen from 163 tech companies listed in SEHK. The backtesting showed that the Index would have generated 36% return in 2019 and 45.5% in 2020 year-to-date, easily outperformed the rivalling NASDAQ Composite for the same period.
Let’s take a deeper look at the initial list of Hang Seng Tech Index.
#1 – Alibaba (SEHK:9988)
Alibaba Group Holding Ltd. engages in providing online and mobile marketplaces in retail and wholesale trade. It operates through the following business segments: Core Commerce; Cloud Computing; Digital Media and Entertainment; and Innovation Initiatives and Others. The Core Commerce segment comprises of platforms operating in retail and wholesale. The Cloud Computing segment consists of Alibaba Cloud, which offers elastic computing, database, storage and content delivery network, large scale computing, security, management and application, big data analytics, a machine learning platform, and other services provide for enterprises of different sizes across various industries. The Digital Media and Entertainment segment relates to the Youko Tudou and UC Browser business. The Innovation Initiatives and Others segment includes businesses such as AutoNavi, DingTalk, Tmall Genie, and others.
#2 – Tencent (SEHK:700)
Tencent Holdings operates through the following segments: Value-Added Services, FinTech and Business Services, Online Advertising, and Others. The Value-added Services segment involves online and mobile games, community value-added services, and applications across various Internet and mobile platforms. The FinTech and Business Services segment provides fintech and cloud services, which include commissions from payment, wealth management and other services. The Online Advertising segment represents display based and performance based advertisements. The Other segment consists of trademark licensing, software development services, software sales, and other services.
See more financial metrics for Tencent (SEHK:700).
Meituan Dianping is an investment holding company, which engages in the provision of a platform that uses technology to connect consumers and merchants. It operates through the following segments: Food Delivery, In-store, Hotel, and Travel, and New Initiatives and Others. The Food Delivery segment provides food ordering and delivery service. The In-store, Hotel, and Travel segment offers merchants to sell vouchers, coupons, tickets, and reservations in the platform. The New Initiatives and Others segment includes revenue derived from cloud-based enterprise resource planning systems, integrated payment services, supply chain solutions to merchants, small and medium-sized merchants financing services, local transportation services, and other products and services.
#4 – Xiaomi (SEHK:1810)
Xiaomi Corp. engages in the design, manufacture and sale of smartphone, hardware and software products. Its business covers power bank, audio, camera and lifestyle. Xiaomi doing business through three business segments-Hardware, E-commerce & New Retail and Internet services. Its products include power bank pro, headphones, in-ear headphones pro, bluetooth headset basic with dock, bluetooth speaker, sphere camera, home security camera, action camera, robot builder, electric scooter, bedside lamp, and body composition scale.
Sunny Optical Technology (Group) Co. Ltd. engages in the design, manufacture, and sale of optical and optical devices products. It operates through the following businesses: Optical, Optoelectronic, Instrument and Technical Support. The Optical Business manufactures and sells lenses and lens module. The Optoelectronic Business produces cell phone camera module and photoelectric vision products. The Instrument Business includes microscopic, analytical and surveying instrument. The Technical Support Business provides consultancy services for licensed application.
#6 – SMIC (SEHK:981)
Semiconductor Manufacturing International Corp. engages in the production and sale of semiconductor products. It provides integrated circuit foundry and technology services, as well as technology solutions for logic, mixed-signal and radio frequency, high voltage, system on a chip, flash, and electrically erasable programmable read-only memory (EEPROM) circuits.
See more financial metrics for SMIC (SEHK:981).
Alibaba Health Information Technology Ltd. is an investment holding company, which engages in the provision of Internet technology, service tools, and platforms to offer medical and healthcare services. Its activities include self-operated healthcare product sales, e-commerce platform services, tracking services, and innovative healthcare related services and others.
#8 – JD (SEHK:9618)
JD.com, Inc. is a technology driven E-commerce company. It engages in the sale of electronics products and general merchandise products, including audio, video products, and books. The company operates through the following business segments: JD Mall, and New Businesses. The JD Mall segment represents its core e-commerce business. The New Businesses segment includes logistic services provided to third parties, technology services, overseas business, insurance and O2O. It also provides an online marketplace, whereby third-party sellers sell products to customers primarily through its websites and mobile apps. The company offers advertising, logistics and other value-added services.
See more financial metrics for JD (SEHK:9618).
#9 – Kingdee (SEHK:268)
Kingdee International Software Group Co., Ltd. engages in the development, manufacturing, and sale of enterprise management software products. It operates its business through the following segments: Enterprise Resources Planning, Cloud Services, and Others. The Enterprise Resources Planning segment comprises of sales and implementation of enterprise management software; provision of other related services; sales of hardware related to enterprise management software arrangements; and sales of middleware software business. The Cloud Services segment provides online service related to cloud service, e-commerce, and other online management services. The Others segment operates investment properties.
See more financial metrics for Kingdee (SEHK:268).
Ping An Healthcare & Technology Co. Ltd. is an investment holding company, which engages in the provision of online medical and wellness services. It operates through the following business segments: Family Doctor Services, Consumer Healthcare, Health Mall, and Health Management and Wellness Interaction.
#11 – AAC Tech (SEHK:2018)
AAC Technologies Holdings, Inc. engages in the manufacture and distribution of miniaturized acoustic components. It operates through the following segments: Dynamic Components, Haptics and Radio Frequencies, Micro Electro-Mechanical System Components, and Other Products.
#12 – Lenovo (SEHK:992)
Lenovo Group Ltd. engages in the developing, manufacturing, and marketing technology products and services. Its products include personal computers, workstations, servers, storage, smart televisions, and mobile products such as smartphones, tablets, and applications.
See more financial metrics for Lenovo (SEHK:992).
#13 – Kingsoft (SEHK:3888)
Kingsoft Corp. Ltd. engages in Internet based research, development, operation and distribution of entertainment, internet security, and application software. It operates through the following segments: Entertainment Software, Cloud Services, and Office Software and Services. The Entertainment Software segment comprises of the research, development, and provision of online, mobile, and casual games. The Cloud Services segment provides cloud storage and computation services. The Office Software and Services segment offers the design, research and development, and sales and marketing of office software products and services of WPS Office.
#14 – ASM Pacific (SEHK:522)
ASM Pacific Technology Ltd. engages in the design, manufacture, and marketing of machines, tools and materials used in semiconductor industries. It operates through the following segments: Back-End Equipment, Surface Mount Technology Solutions, and Materials. The Back-End Equipment segment manufactures and markets semiconductor machines and tools. The Surface Mount Technology Solutions segment deals with the manufacture and sale of surface mount technology placement machines. The Material segment involves in production and sale of semiconductor materials.
China Literature Ltd. engages in the provision of reading services, copyright commercialization, writer cultivation and brokerage, operation of text work reading and related open platform, which are all based on text work, and the realization of these activities through technology methods and digital media including but not limited to personal computers, Internet and mobile network in the People’s Republic of China.
#16 – NetEase (SEHK:9999)
NetEase, Inc. is an internet technology company, which premium online services centered around content, community, communication and commerce. It develops and operates some of the most popular PC-client and mobile games in China. The firm also operates some of the most popular international online games in China by partnering with Blizzard Entertainment, Mojang AB (a Microsoft subsidiary) and other global game developers. NetEase also offers other innovative services, including the intelligent learning services of its majority-controlled subsidiary, Youdao, its music streaming platform, NetEase Cloud Music, and its private label e-commerce platform, Yanxuan. The company operates through following business segments: Online game services, Youdao, and Innovative businesses and others. The Online game services segment has produced some of China’s most renowned and longest running online PC-client games, including Fantasy Westward Journey Online and New Westward Journey Online II, as well as other highly successful games, such as Tianxia III, New Ghost and Justice. The Youdao segment is an online education service provider in China. Through Youdao, the Company’s majority-controlled subsidiary, NetEase is dedicated to developing and using technologies to provide learning content, applications and solutions to users of all ages. The Innovative businesses and others segment offers other innovative services, including live video streaming, music streaming and its private label e-commerce platform, Yanxuan.
#17 – ZTE (SEHK:763)
ZTE Corp. engages in the design, development, manufacture, and sale of information and telecommunication technology products. The company has the most complete telecommunications product line, covering every vertical sector of wireless networks, core networks, access & bearer networks, services and terminals markets. Its business segments include Carrier Network, Government, Corporate and Consumer Businesses. Its Carrier Network division offers wireless and wired access, bearer networks, core networks, and telecommunication software systems and services. Its Government and Corporate division provides information solutions such as communication networks, internet of things, large data, and cloud computing products. Its Consumer division develops, produces, and sells smart phones, mobile data terminals, and home information terminals.
See more financial metrics for ZTE (SEHK:763).
ZhongAn Online P&C Insurance Co. Ltd. engages in the provision of insurance services. It offers property and casualty insurance products, covering accident insurance, bond insurance, health insurance, liability insurance, credit insurance, cargo insurance, and household property insurance.
#19 – Weimob (SEHK:2013)
Weimob, Inc. engages in the provision of cloud-based commerce and marketing solutions. It operates through the SaaS Products and Targeted Marketing segments. The SaaS Products segment includes Commerce Cloud, Marketing Cloud, and Sales Cloud, all built on top of Weimob Cloud platform. The Targeted Marketing segment offers advertisers automated marketing tools and precise audience targeting on premium media sources including WeChat Moments, QQ, Baidu, and Zhihu.
See more financial metrics for Weimob (SEHK:2013).
BYD Electronic (International) Co., Ltd. engages in the manufacture, assembly, and sale of mobile handset components and modules. The company also involves in providing design and assembly services for mobile intelligent terminal. Its products include casings, modules, keypads, and other components.
#21 – Tongcheng-Elong (SEHK:780)
Tongcheng-Elong Holdings Ltd. engages in the provision of travel related services. It offers accommodation reservation services, transportation ticketing services, and online advertising services.
#22 – Koolearn (SEHK:1797)
Koolearn Technology Holding Ltd. engages in providing online education services. It operates through the following segments: College, K12, Pre-School, and Institutional Customers. The College Education segment provides online education service targeted to college and above students and adults. The K12 Education segment offers service targeted to primary school, middle school and high school students.The Pre-School Education segment targets pre-school students. The Institutional Customers segment services institutional clients.
Hua Hong Semiconductor Ltd. engages in the manufacture and sale of semiconductor products in the consumer electronics, communications, computing, and industrial and automotive industries. It also involves in the development of wafer process technologies.
#24 – Maoyan Ent (SEHK:1896)
Maoyan Entertainment provide entertainment services like online entertainment ticketing services, entertainment content services, e-commerce services and advertising services.
#25 – FIT Hon Teng (SEHK:6088)
FIT Hon Teng Ltd. engages in the manufacturing, selling, and service of connectors, case, thermal module, wired/wireless communication products, optical products, power supply modules and assemblies.
#26 – XD Inc (SEHK:2400)
XD, Inc. engages in the development, operation, publishing and distribution of mobile, web games and provision of information services. It offers online and premium games.
See more financial metrics for XD Inc (SEHK:2400).
HengTen Networks Group Ltd. is a flagship company, which provides community owners with one-stop online-offline convenient services by using the Internet technology. It operates through four segments: Internet Community Services, Investments, Property Investment, and Manufacture and Sales of Accessories.
#28 – Q Tech (SEHK:1478)
Q Technology (Group) Co. Ltd. engages in the design, research, development, manufacture, and sale of camera modules and fingerprint recognition modules. It offers camera products for phones, computers, smart devices, and monitor units.
See more financial metrics for Q Tech (SEHK:1478).
#29 – NetDragon (SEHK:777)
NetDragon Websoft Holdings Ltd. engages in building internet communities. It operates through the Gaming and Education segments.
#30 – Yixin (SEHK:2858)
Yixin Group Ltd. is an automotive transaction platform, which offers new and used car purchasing, transaction-related services, such as automakers, auto dealers, financing and insurance partners as well as aftermarket service.
See more financial metrics for Yixin (SEHK:2858).
Below is an overview of the constituents of the Hang Seng Tech Index (courtesy of CGS-CIMB).
The digital iron curtain between the US and China is intensifying. Countries will be forced to choose between the two in this bipolar world. China is no longer a mere copycat of the US and have her own achievements in pushing the frontiers of technology. Hang Seng Tech Index is a way to prove the technological prowess in the east and a force to be reckoned with.