“ATMXS” spells the future of HK tech

July 22, 2020 10:07
Photo: Reuters

First, the good news. Hong Kong will have a Nasdaq-equivalent index.

But, the sad news is almost all component companies are from mainland, not Hong Kong in the upcoming Hang Seng Tech Index.

No worry. Hong Kong can draw some comfort from what is known as the Wimbledon effect, which is listed one of the four Grand Slam tennis tournaments despite a lack of British presence most of the time.

Those investors who made money this year are mostly on China plays anyway, in particular tech stocks.

Yesterday, Alibaba Group surged seven per cent and Tencent Holdings surged eight per cent to fresh high while Meituan Dianping surged nine per cent. The three, dubbed as ATM, contributed to most of the gains ahead of the Hang Seng Tech Index to be debuted next Monday.

As of the year-to-date, Alibaba Group went up 24 per cent, followed by a 50 per cent gain for Tencent Holdings, and a 100 per cent return for Meituan Dianping.

By contrast, Hang Seng Index lost about 10 per cent during the period.
China’s gain is really Hong Kong’s loss. Check the Hong Kong banking and property counters and one will get the picture.

The Hang Seng Tech Index is made up of the top 30 technology plays listed in Hong Kong, whose business spans from network, fintech, cloud, e-commerce and digital business.

As with the famous acronym FAANG (Facebook, Amazon, Apple, Netflix and Alphabet (formerly Google)), the top five Hang Seng Tech Index will make up of ATMXS, which stands for Alibaba, Tencent, Meituan, Xiaomi and Sunny Optical.

The Hang Seng Tech Index is a barometer for how money has been chasing up the mainland technology sector that benefits from the new normal in the current pandemic.

The index also benefits in the homecoming exercise of Nasdaq-listed giants like JD.com and Netease for secondary listing this year.

More mainland tech giants are in the pipeline. Ant Financial, owned by Alibaba Group founder Jack Ma, is probably going to be the largest IPO in the world this year as the fintech player is targeting on a US$200 billion valuation.

Even Didi, the China’s answer to Uber Technologies, is said to be considering an IPO, although car-hailing, along with other co-sharing new economy play, is not exactly a hot thing under the epidemic.

But China tech is hot. Welcome to the crazy summer rally!

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EJ Insight writer