MiniMax and Zhipu Join Hang Seng Tech Index Amid Market Slump

The addition of Chinese AI companies MiniMax and Zhipu to Hong Kong's Hang Seng Tech Index represents a significant development for the industry, even amid a general market decline. The Hang Seng Index decreased by 1.2%, while the Tech Index fell by 2.7%. In contrast, South Korea's Kospi experienced a steep drop of 8.3%, and Taiwan's Taiex declined by 3.5%. Analysts predict considerable passive inflows as index-tracking funds realign their portfolios. Morgan Stanley forecasts that these firms could represent 5 to 7% of the benchmark, translating to passive inflows of between US$1.25 billion and US$1.75 billion. Zhipu's initial weighting is set at 0.53%, while MiniMax's is at 0.36%. Furthermore, had they been included at their IPOs, the index's year-to-date return would have been approximately 5 percentage points higher. Hong Hao from Lotus Asset Management emphasized that their inclusion will enhance liquidity as index funds are compelled to purchase shares, and Zhipu's larger market capitalization may result in a higher weighting and improved performance. Zhipu will also join the Stock Connect program starting Monday, but potential lock-up expirations could threaten gains.