HKEX adds AI, semiconductor indexes and mainland ETF benchmark deal

By Sophie Lindqvist

Hong Kong Exchanges and Clearing will launch indexes covering 40 Hong Kong-listed AI-linked companies and 30 semiconductor-related companies, the exchange said on the 23rd. HKEX also signed a licensing agreement with Chinese asset manager China Southern Asset Management for a mainland China ETF tied to the AI benchmark.

The announcement gave no launch date for either index or the ETF, and disclosed no ETF fee or asset target, leaving the planned capital channel’s scale unstated.

What do the two indexes hold?

The HKEX Artificial Intelligence Index will hold 40 companies deeply involved in the AI value chain. HKEX divides that exposure into five layers:

• Chip design
• Data centers
• AI infrastructure
• AI models
• Software and physical applications

The HKEX Semiconductor Index will hold the 30 semiconductor-related Hong Kong listings with the largest market capitalizations, spanning semiconductor manufacturing, manufacturing equipment, electronic components, computing hardware, and storage. Every constituent in both indexes trades in Hong Kong. That restriction confines the benchmark universe to the local market despite the planned mainland ETF.

How will HKEX select and weight stocks?

Both indexes prioritize companies actively engaged in AI-related research and development and capital expenditure. HKEX will screen and weight stocks using fundamental factors.

Companies with larger AI research spending are therefore more likely to attract linked investment money, a direct consequence of the indexes’ stated emphasis on research activity and capital spending. The announcement does not name constituents or specify spending thresholds, weighting limits, or detailed selection rules. That omission limits what investors can infer about concentration and the likely demand for each constituent.

What does the ETF licensing deal change?

HKEX signed an index-licensing agreement with China Southern Asset Management. The asset manager will set up an exchange-traded fund in mainland China that tracks the AI index. Specific product details will come later, so the agreement confirms a planned distribution channel rather than a live fund.

HKEX says the wider goal is to encourage capital inflows into technology companies listed in Hong Kong. Mainland capital acceptance is a policy priority for the Hong Kong market, and index licensing could broaden demand for local AI and semiconductor stocks.

Investors must first buy the mainland ETF, and that fund must then channel sufficient money into its Hong Kong constituents, a two-step process HKEX has not quantified.

Why is HKEX expanding its index business?

The indexes extend HKEX’s gradual build-out of in-house index compilation. Group Chief Information Officer Leung Sung-kwong said AI and semiconductors “are transforming every industry and becoming a key driving force behind global growth and innovation.” He said a broader index business would give investors more ways to capture new trends and participate in the region’s technology ecosystem.

The measurable commercial test is narrower: linked products must attract assets and deliver the investment performance and liquidity that investors demand in a competitive thematic market.

Can the indexes attract meaningful capital?

The AI index has one named prospective ETF licensee: China Southern Asset Management. The announcement identifies no linked ETF for the semiconductor index. The indexes’ effectiveness depends on future ETF launches and the scale of mainland inflows.

The mainland thematic ETF market is highly competitive. Investors judge products on investment performance and liquidity. HKEX must raise index visibility and deepen the lineup of linked products if either benchmark is to influence trading demand.

A small launch would provide limited demand for constituents, regardless of the AI narrative, and HKEX has offered no asset target from which investors could estimate near-term flows. The next test is whether China Southern launches the mainland AI ETF with enough scale and liquidity to attract capital, because competition will determine whether either benchmark can channel meaningful money into Hong Kong technology stocks.