FTSE China A50 Index Constituents Adjustment: Power stocks become new favorites, these stocks are removed

On September 4th, the highly anticipated "FTSE Russell" announced quarterly review changes to the FTSE China 50 Index, FTSE China A50 Index, FTSE China A150 Index, FTSE China A200 Index, and FTSE China A400 Index. The above changes will take effect after the market closes on Friday, September 20, 2024 (Monday, September 23, 2024).

FTSE Russell is a globally significant index covering markets in over 70 countries and regions, with approximately $20 trillion in assets benchmarked against FTSE Russell index products.

Among them, the FTSE China 50 Index is the most widely used Hong Kong-listed Chinese large-cap index globally, covering H-shares, red-chip shares, and P-shares (private enterprise shares).

In this review, China Tower (00788.HK) will be included in the FTSE China 50 Index.

As of September 5th, China Tower's stock price rose by 1.02% to HKD 0.99 per share, with a current market value of up to HKD 174.2 billion. The company has seen a cumulative increase of over 27% since the beginning of this year.

Looking at historical index component changes, the adjustment logic is mainly due to changes in market capitalization, which is closely related to the company's periodic stock performance.

Recently, China Tower also released its mid-year performance for 2024, achieving operating income of RMB 48.247 billion in the first half of the year, a year-on-year increase of 3.8%; and a profit of RMB 5.33 billion, a year-on-year increase of 10.1%, showing stable performance.

In addition, the backup list for this review includes China Merchants Securities (06099.HK), Fuyao Glass (03606.HK), Guotai Junan (02611.HK), Shandong Gold (01787.HK), and ZTE Corporation (00763.HK).

The FTSE China A50 Index is designed to meet the needs of domestic Chinese investors and Qualified Foreign Institutional Investors (QFII) for a real-time tradable index. The index consists of the 50 largest stocks by total market value in the Shanghai and Shenzhen stock exchanges, reflecting the performance of the top 50 most influential listed companies in the A-share market.

In the eyes of foreign investors, the FTSE China A50 Index has always been a barometer of A-shares, the preferred choice for "smart money" to allocate A-shares, and is considered the "moonlight" in the eyes of foreign investors.

In this review, the FTSE China A50 Index includes two major power stocks, China Nuclear Power (601985.SH) and Huaneng Hydropower (600025.SH), while removing China International Travel Service (601888.SH) and Jinlongyu (300999.SZ).

As of September 5th, China Nuclear Power rose by 0.29% to RMB 10.3 per share, with a market value of RMB 194.5 billion, while Huaneng Hydropower slightly declined by 0.09% to RMB 10.82 per share, with a market value of RMB 194.8 billion. The cumulative increase in the stock prices of these two power companies since the beginning of this year has exceeded 40% and 28%, respectively. In contrast, China International Travel Service and Jinlongyu have seen cumulative declines of over 28% and 23% this year So far this year, in the context of a sluggish market, power sector stocks have been favored by patient capital due to their stable performance and dividend attributes, while consumer stocks have shown relatively weak overall performance in terms of both business results and stock prices.

In addition, the list of alternative stocks for the FTSE China A50 Index this time includes China Coal Energy (601898.SH), China Shipbuilding (600150.SH), China Unicom (600050.SH), North Huachuang (002371.SZ), and Luoyang Molybdenum (603993.SH). Until the next quarter's review of constituent stocks, if one or more constituent stocks are deleted, alternative stocks will be selected. These stocks have generally performed well this year, with China Coal Energy and Luoyang Molybdenum seeing cumulative gains of over 45% and 37% respectively