Preview of China Gold Hong Kong Stock Connect and Hang Seng Index adjustment: Zijin Gold International (02259) and others are expected to be included in the Hang Seng Index, with an estimated 44 companies expected to be included in the Hong Kong Stock Connect.

China International Capital Corporation (CICC) released a research report stating that Hang Seng Index Company will officially announce the results of the Hang Seng Series Index adjustments on February 13, 2026 (Friday) after the market closes, and the adjustments will be formally implemented on March 9, 2026 (Monday). After the adjustments take effect on March 9, the Shanghai and Shenzhen Stock Exchanges will adjust the eligible investment scope of the Shanghai-Shenzhen-Hong Kong Stock Connect based on this (specific timing subject to the exchange's announcement). Based on the adjustment methodology of the Hang Seng Index and verification of subjective adjustment standards through previous actual adjustment results, CICC calculated that ZIJIN GOLD INTL (02259), BEONE MEDICINES (06160), YUM CHINA (09987), XPENG-W (09868), PICC P&C (02328), AKESO (09926), China Pacific Insurance (02601), and LAOPU GOLD (06181) are among the top candidates eligible for inclusion. Market capitalization ranking is given priority in the calculation, combined with factors such as industry representation and coverage rate. During this period, similar to MSCI index adjustments, some active funds may still conduct arbitrage operations based on the announced results of the adjustments. However, passive funds will choose to adjust their positions on March 6, the trading day before the adjustments take effect, in order to minimize tracking errors. At that time, trading volume of related stocks may exhibit significantly higher than usual "abnormal trading volume," especially towards the closing. Key points from CICC: Hang Seng Index adjustment: Some companies meet the inclusion criteria; after HANG SENG BANK is delisted, some Hong Kong companies may "replace" it. Based on the methodology of the Hang Seng Index adjustments and verification of subjective adjustment standards through previous actual adjustment results, CICC calculated that companies such as ZIJIN GOLD INTL, BEONE MEDICINES, YUM CHINA, XPENG-W, PICC P&C, AKESO, China Pacific Insurance, and LAOPU GOLD meet the criteria for inclusion and are among the top candidates. The calculation prioritizes the market capitalization ranking, combined with factors such as industry representation and coverage rate. However, it should be specifically pointed out that historical experience shows that there can be discrepancies between actual results and the quantitative selection ranking, such as YUM CHINA and BEONE MEDICINES ranking high in previous predictions but ultimately not being included. This is mainly due to the lack of explanation or quantifiable basis for some of the inclusion criteria of the Hang Seng Index, such as industry and listing representation, which involve subjective judgment factors. In addition, HANG SENG BANK (00011), an original constituent of the Hang Seng Index, will be privatized on January 27 and delisted from the Hong Kong Stock Exchange. Therefore, HANG SENG BANK was removed from the Hang Seng Index and various sectoral indices after the market closed on January 14. Considering that the detailed rules of the Hang Seng Index calculation explicitly state that the index will retain at least 20 constituents identified as Hong Kong companies, with this number reviewed at least every two years, there is a possibility of "replacing" other Hong Kong companies in the Hang Seng Index. Based on factors such as market capitalization ranking and industry coverage rate, CICC estimates that STANCHART (02888), SWIREPROPERTIES (01972), and SINO LAND (00083) are among the top candidates, but there is uncertainty about whether they will be "replaced" during this adjustment. Hong Kong Stock Connect adjustments: 44 stocks are expected to be included; 25 may be removed. This adjustment also coincides with the annual review of the Hang Seng Composite Index (ASX) (the index is adjusted twice a year, with cut-off calculation dates on June 30 and December 31). Since the Hang Seng Composite Index is the sample space for Hong Kong Stock Connect investments, any changes will directly affect the investable scope of the Hong Kong Stock Connect. It should be noted that since the beginning of this year, Hang Seng Index Company has optimized its calculation method for the 12-month average market value of the sample in the index review process (from the average market value at the end of each month in the past 12 months to the average market value on each non-suspended trading day in the past 12 months) and the handling of long-term suspended components (the market value and liquidity data before resumption will be excluded from the test calculation). According to the latest method, CICC estimates that: starting with the requirements of the Hang Seng Composite Index constituents, and considering additional standards for inclusion in the Hong Kong Stock Connect (e.g., including Hang Seng Composite Index small-cap stocks with a market value of over HK$5 billion, excluding stocks subject to exchange-imposed risk alerts, trading suspensions, or entering into a delisting or a period of consolidation; stocks with different voting rights also need to meet additional conditions of being listed for 6 months, 20 trading days, market value, and trading volume, etc.), CICC estimates that this time there may be a total of 44 stocks that meet the criteria for inclusion in the Hong Kong Stock Connect, including JD INDUSTRIALS (07618), CHUANGXIN IND (02788), BANK OF E ASIA (00023), DEEPEXI TECH (01384), SOFTCARE (02698), INSILICO (03696), SEYOND (02665), ONEROBOTICS (06600), HASHKEY HLDGS(03887), JIAXIN INTL RES (03858), 51WORLD (06651), GUOXIA TECH (02655), CIRRUS (02507), 160 HEALTH (02656), QINGSONG HEALTH (02661), AB&B BIO-TECH-B (02627), JST GROUP (06687), XUNCE (03317), PATEO (02889),... Please let me know if you'd like me to continue the translation.