Hong Kong’s Hang Seng Tech Index incorporated two Chinese AI pure-play firms, MiniMax Group and Knowledge Atlas Technology, on Monday, representing the benchmark’s first dedicated inclusion of AI companies amid broader market declines.
- First pure-play AI firms included in Hang Seng Tech Index
- $1.25–$1.75 billion estimated passive inflows from index inclusion
- Zhipu joins Stock Connect, expanding mainland investor access
What happened
On Monday, Chinese AI companies MiniMax Group and Knowledge Atlas Technology (also known as Zhipu) were officially added to the Hang Seng Tech Index, marking the index's first-ever inclusion of dedicated AI firms. This milestone reflects growing recognition of AI's role in the region’s technology sector and alters the composition of Hong Kong’s technology benchmark.
The shares of these companies diverged amid a broader tech sell-off triggered by a stronger-than-expected US jobs report. MiniMax’s stock declined 8.4% to HK$506, while Zhipu’s shares rose slightly by 1.3% to HK$1,314. Meanwhile, key regional indexes including the Hang Seng Tech Index itself fell, underscoring market volatility despite the milestone inclusion.
Why it matters
This index adjustment is significant as it introduces pure-play AI firms into a major Hong Kong benchmark, potentially driving an estimated $1.25 billion to $1.75 billion in passive inflows as index-tracking funds rebalance portfolios. Morgan Stanley projects that MiniMax and Zhipu could ultimately account for 5 to 7 percent of the Hang Seng Tech Index weight, expanding liquidity for these AI firms.
Additionally, Zhipu's inclusion in the Shenzhen Stock Exchange’s Stock Connect programme from the same day grants broader access to mainland Chinese investors, potentially amplifying demand. These changes occur during a period when Hong Kong tech stocks face challenges regaining momentum, yet mainland AI-focused firms are attracting increased investor interest focused on China's national AI development push.
What to watch next
Investors should monitor the impact of upcoming share lock-up expirations that will increase the number of tradeable shares for MiniMax and Zhipu. About 46% of MiniMax’s shares are expected to become available in July, while around 40% of Zhipu’s shares will be unlocked in January next year. This rise in supply could pressure share prices despite passive inflows tied to index inclusion.
Market participants will also watch if the passive inflows can absorb selling pressure from early investors taking profits after significant IPO gains. Additionally, the relative performance of Zhipu, which carries a larger index weighting, may set a benchmark for pure-play AI stocks in Hong Kong’s tech sector and influence future index composition decisions.