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Hang Seng inclusion expected
Latest Updated by 2003-05-09 16:18:22
Yue Yuen Industrial Holdings, which makes one in six pairs of the world's athletic shoes, is the front runner to join Hong Kong's blue-chip Hang Seng Index, analysts and investors said.
If the shoemaker is included in the index at the current quarterly review, due within 10 days, it will likely push out a property company — reflecting a fall in fortunes by what was once Hong Kong's premier investment sector.
The prize for joining the benchmark index of 33 blue-chip stocks in Asia's number two share market will be inclusion in still more portfolios as a must-have holding for index investors.
"Yue Yuen is the stand-out candidate. It's the 24th largest stock in the market," said David Rabinowitz, associate director of quantitative research at UBS Warburg.
Hong Kong-based Yue Yuen, which makes shoes in southern China for Nike, Reebok, Adidas and other global brands, is expected to edge China-focused conglomerates COSCO Pacific Ltd. and China Merchants Holdings for inclusion in the index.
Yue Yuen, the world's largest maker of athletic shoes, this month joined the MSCI Asia ex-Japan index, which UBS Warburg figures will attract US$184 million in new funds.
Index membership would help ease worries that Yue Yuen, a favorite of buy-and-hold institutional investors, is insufficiently liquid. Trading volumes spiked as Yue Yuen joined the MSCI index.
Taiwan's wealthy Tsai family and its Pou Chen Corp. dominate the shoemaker's share register. Yue Yuen says publicly free floated shares total 28 percent of the US$3.1 billion firm.
Index compiler HSI Services Ltd. primarily looks at a company's market capitalization and turnover over a 12-to-24-month period but also takes into account sector balance.
Lender HSBC Holdings dominates the index and plenty of property stocks are represented but the Hang Seng benchmark also reflects the city's growing integration with China as a market and manufacturing base.
"There are an increasing number of constituents that have business on the mainland -- that's because the market is like that. The index reflects the changes taking place in the market," said Vincent Kwan, general manager at HSI Services Ltd.
New World Development Co. Ltd. and fellow property firm SinoLand Co. Ltd. are those most likely to be removed from the index, market watchers said.
Hang Seng inclusion often boosts share prices. Fashion retailer Esprit Holdings Ltd. has gained 8 percent since joining the index last December despite a 13 percent slump in the index. Likewise, stocks kicked out tended to fall.
"But it still comes down to fundamentals. Sometimes it's just a short-term boost," UBS Warburg's Rabinowitz said.
Editor: Wings
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By: Source：szdaily
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