The Hang Seng Tech Index refines six major technology themes. What are the benefits of this adjustment?

On March 26th, Hang Seng Index Company released an optimized disclosure regarding the Hang Seng Tech Index, dividing the technology theme into more detailed categories. What seems like a minor tweak actually relates to the “purity” of the index’s technology exposure.

Since its launch in 2020, the Hang Seng Tech Index has been based on six major technology themes: Internet, Fintech, Cloud, E-commerce, Digital, and Intelligence. Previously, these six themes were defined quite broadly. For example, what exactly is included under “Intelligentization”? Different people might have different interpretations. The core of this optimization is to further break down each theme into more specific sub-themes.

For example, the “Internet” theme, which previously only referred to “Internet-related businesses,” is now detailed as online services (e-commerce platforms, online travel, etc.) and wireless and mobile applications (mobile payments, social apps, etc.). Similarly, “Intelligentization,” which was previously vague, now explicitly lists robotics technology, autonomous driving, artificial intelligence, Internet of Things, and smart living.

Table: New Technology Sub-Themes Added to the Hang Seng Tech Index

It’s important to emphasize that the index calculation method itself has not changed; what has changed is the transparency of the rules. It’s like previously only requiring “good performance,” but now clearly stating “math score above 90, Chinese score above 85.” The rules are clearer, and the index becomes more pure.

So, what are the benefits of this adjustment? First, the companies in the index are more genuinely aligned with technology. Companies already in the index will need to regularly demonstrate their relationship with these sub-themes, such as how much they have invested or their technological progress. This encourages them to maintain their technological core and avoid complacency. Second, outside companies now know how to work harder. Firms aiming to enter the index now have a “clear checklist” to compare against the six major themes and dozens of sub-directions, making their goals more transparent. Third, the index’s value as an investment tool is enhanced. Many investors use the Hang Seng Tech Index to represent “Chinese tech assets.” The clearer the rules, the better the index can capture true tech leaders, making long-term holding more reassuring.

Looking at the fundamentals of Hang Seng Tech, its valuation has already been deeply priced in. Long-term trends like AI and cloud computing are still progressing. With this rule optimization, the index’s “tech purity” is higher. For ordinary investors, ETFs are a convenient way to participate in this layout.

Wind data shows that as of April 3rd, the Hang Seng Tech ETF E Fund (513010) achieved an excess return of 0.25% over the past year compared to the index. It is the only ETF among similar billion-scale products that “beat” the index, with a tracking error of only 0.10% during the same period. Investors without stock accounts can consider the E Fund Hang Seng Tech ETF Connect Fund (Class A: 013308 / Class C: 013309).

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Editor: Zhang Qiaosong