In the early 2000s, the largest Hong Kong-listed companies by market capitalisation fell in a wide array of sectors. Back in those days, the old economy stocks were in favor of investors. Specifically, coal miner, crude oil producer and metal factory were among the top companies on the Hang Seng Index. Traditional brick-and-mortar businesses also included the real estate sector, which took three slots in 2001, in addition to CK Hutchison (then Cheung Kong Group) (0001) that was actively participating in the real estate business before the group restructuring and spinoff in 2015.
Concentrating in financials and tech
In the 20 years since then, mainland Chinese mega caps have become the majority of the heavyweights. The sector trend is more or less a side reference of the structural changes to China’s economy, state-owned banks and insurers and tech giants. For example, the Chinese equivalent of FAANGs, the so-called ATMXJ stocks, Alibaba (9988), Tencent (0700) Meituan (3690), Xiaomi (1810) and JD.com (9618) have made up a sizable representation in the benchmark index and became on the even keel with banks in terms of scale.
One interesting name in the list is the video-sharing platform Kuaishou Technology (1024), which floated on February 5 2021 but became the 11th largest among 2,000 stocks listed in the bourse in total. Along with online game developers NetEase (9999), the prevailing changes to the list seem to unveil a major transition of the domestic growth drivers from manufacturing to domestic consumption and demand.
Comparing the two columns, we found that only three leaders 20 years ago stay today. HSBC (0005), and China Mobile (0941) were the most and second most representable by market cap in 2001. Capitalizing on the opening-up of Chinese capital markets, Hong Kong Exchanges and Clearing (0388) has bumped its scale up to US$76.7 billion from merely US$ 1.87 billion over the past 20 years and remains in the top 20. But none of them could make it to the top today.
Shared trend in A-shares
The onshore market is also shifting from heavy industries to consumer and healthcare focus. Domestic-facing companies continue to take a bigger share in the Shanghai stock market. Notably, Chinese premium white liquor brand Kweichow Moutai (600519) that taps into the wealth of the expanding middle-class bumps to the top. Innovative biotech companies, such as oncology drug makers Jiangsu Hengrui Medicine (600276) and Wuxi AppTec (603259), also gain bigger foothold in the market which gradually becomes less dominated by the US drug distributors.
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