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Hong Kong’s Hang Seng TECH index (HSTECH) launched on Monday and the Shanghai stock exchange published the STAR 50 index <.STAR50> for the largest stocks on its year-old Nasdaq-style board last week.
Over the next five years, index-tracking and exchange-traded funds could pour $11 billion into the STAR 50 and $14 billion into the Hang Seng TECH, the investment bank’s analysts estimated.
The TECH index could grow from $150 billion to $870 billion and the STAR 50 from $40 billion to $800 billion in this time.
“Overall, we’d view our assumptions as conservative and hence the risk of potential inflows could skew to the upside,” they wrote.
The two markets are adding more tech companies, which are increasingly significant in the Chinese economy, to key indexes.
Shanghai revamped its benchmark (SSEC) this month. Household names Alibaba (N:BABA) (HK:9988), Meituan Dianiping (HK:3690) and Xiaomi (OTC:XIACF) Technology (HK:1810) may join Hong Kong’s Hang Seng Index (HSI) next month.
Internet giant Tencent (HK:0700) would be the biggest loser with $1.2 billion of passive outflows should all three be incorporated, while insurer AIA Group (HK:1299), in second place, could lose $121 million, said the report.
