Debutant XPeng To Be Added To Hong Kong Exchange's Blue-Chip Index

Close on heels of XPeng, Inc.'s XPEV debut on the Hong Kong stock exchange, the EV maker is to become a part of the exchange's key index.

What Happened: Xpeng said the company will be added to the Hang Seng Composite Index after the market closes on July 20.

The index inclusion comes after the Hang Seng Indexes Company deemed that XPeng met the "fast entry rule" of various indexes.

The company will also be added to the Hang Seng Composite Industry Index - Consumer Discretionary, as well as the Hang Seng Composite LargeCap Index, the Hang Seng Composite LargeCap & MidCap Index, and the Hang Seng Consumer Goods & Services Index.

XPeng shares began trading on the Main Board of the Hong Kong stock exchange Wednesday under the code "9868." The company has pursued dual primary listing, given the regulatory mandate for a minimum of two years as a public company for a secondary listing.

The company also noted that the Hong Kong-listed shares will be fully exchangeable with its ADSs listed on the NYSE.

Related Link: Nio, XPeng Clock Record June Deliveries: Which EV Maker Outperformed?

Why It's Important: The Hang Seng was launched in 1969 and has become the most widely quoted indicator of the performance of the Hong Kong stock market. The index uses a free float market capitalization weighting scheme, with no single component's index weight exceeding 10%.

The constituent stocks, numbering 58, are grouped into four sectors, namely finance, utilities, properties, and commerce & industry.

Index inclusion is a positive for stocks, as funds holding portfolios mirroring the index will buy into the stocks to maintain the respective weightings of the component stocks. The stock will also benefit from increased volume and liquidity due to purchases by index funds and ETFs.

"Inclusion in the Hang Seng Composite Index and the primary listing status in Hong Kong are the key requirements for the Stock Connect scheme," said Brian Gu, XPeng vice chairman and President.

The Stock Connect scheme is a mutual market access program linking the Hong Kong and Mainland China equity markets.
This dual-primary listing, therefore, fulfills the company's long-term strategic objective to be listed in its home region, with direct access to China-based investors, who are likely to be XPeng's customers, Gu added.

XPeng's Hong Kong-listed shares ended the debut session at 165 Hong Kong dollars, flat with the offer price. The shares closed Thursday's session down 8.18% at 151.50 Hong Kong dollars amid negative sentiment over Chinese regulatory clampdown on domestic companies having overseas listings.

The NYSE-listed ADSs of XPeng were down 2.5% at $40.37 at press time.