China’s CSI 300 Index leans towards tech, adding the likes of Cambricon, Empyrean and Hygon in latest review

The compiler of China’s benchmark index of 300 leading companies traded on the Shanghai and Shenzhen stock exchanges is adding tech stocks to increase the representation of the sector, deemed vital to the nation’s economy.

Artificial intelligence chip maker Cambricon Technologies, chip designer Empyrean Technology and high-end processor maker for servers and computers Hygon Information Technology will join the CSI 300 Index of China’s yuan-traded stocks starting next month, China Securities Index said in the latest biannual review.

Medical equipment maker Shanghai United Imaging Healthcare, Avic Airborne Systems, gold producer Zhongjin Gold and eight other companies will also be added to the stock gauge after the market close on December 8, China Securities Index said in a statement. At the same time, 14 companies, including property developer Gemdale and coking coal producer Shanxi Meijin Energy, will be removed.

China Securities Index also unveiled the rebalancing results of the CSI 500 Index and the CSI 1000 Index by making similar adjustments to the constituents. The index compiler, a joint venture between the Shanghai and Shenzhen exchanges, provides and manages hundreds of indices in China.

“After the change in the constituents, the major index members will be more concentrated on the transition of the real economy and tech innovation,” China Securities Index said. “The number of members engaged in information technology, industrial and telecoms services will increase, and that will boost their representation in the indexes.”

China is trying to shift its reliance from credit-fuelled investment to technology and consumption as the main drivers of economic growth under the nation’s tech self-sufficiency drive amid curbs on tech exports by the US.

The CSI 300 Index lags Hong Kong’s Hang Seng Index in reflecting the trend. The information technology industry accounts for 12 per cent of the weighting of the CSI 300 Index, compared with 28 per cent for Hong Kong’s stock benchmark.

Shares of Cambricon and Hygon have rallied at least 63 per cent this year in Shanghai, while Empyrean has risen 9.3 per cent in Shenzhen.

After the rebalancing, the weighting of information technology stocks in the CSI 300 Index will increase by 0.25 per cent, according to the index compiler. The gauge will cover half of the combined 79 trillion yuan (US$11 trillion) capitalisation of the companies trading on the Shanghai and Shenzhen exchanges, it added.

The CSI 300 Index has fallen about 10 per cent this year, making it among the worst-performing key equity gauges globally, as the reopening trade fell apart on worries about the sustainability of China’s economic recovery. Only the Hang Seng Index has fared worse, slumping 13.4 per cent year to date.

The biggest member of the CSI 300 Index is liquor distiller Kweichow Moutai with a 6.4 per cent representation, while the biggest tech stock is chip maker Semiconductor Manufacturing International Corp (SMIC) with a 0.6 per cent weighting, according to Bloomberg data.

Next month, SMIC and Hygon will be included in the SSE 50 Index, Shanghai Stock Exchange’s gauge of 50 biggest stocks, according to a statement by the bourse.

Other additions are Bank of China, China Pacific Insurance Group and China CSSC Holdings, while five companies, including Inner Mongolia Baotou Steel Union and Shanghai Fosun Pharmaceutical Group, will be ejected, it said.