HSI Service Limited announced on Friday that the number of constituent stock in the Hang Seng Index (HSI) will increase to 34 from 33 on Sept. 11, with the inclusion of the first H-share constituent -- China Construction Bank.

China Construction Bank is one of the four largest commercial banks in the Chinese mainland, with a market capitalization value of 788.66 billion HK dollars (101.10 billion U.S. dollars).

According to a press release from the HSI Service Limited, Hong Kong Exchanges and Clearing Limited (HKEx) and Foxconn will also be added into the coming 34-strong HSI.

However, Johnson Electric and Chinese mainland's personal computer giant Lenovo Group will be removed from the HSI.

Vicent Kwan, director of HSI Services Limited, said in a telephone interview with Xinhua that the adjustment of the HSI will make the index represent broader stocks.

He said as the result of the HSI constituent stocks changes have been predicted, the index changes are not expected to bring any major vibration in the Hong Kong stock market.

According to the press release, the first phase of the changes will take place after the market close on Sept. 8, 2006, with the constituent changes.

To be effective from Sept. 11, the Freefloat-adjusted Factor of the new constituents -- China Construction Bank, HKEx and Foxconn, will be applied in full while total market capitalization will be used for the existing constituents.

A cap of 25 percent on individual stock weightings will also be induced, said the HSI Service Limited.

Assuming the above changes had been made, the average market value coverage ratio for the 12 months ended on June 30, 2006 would have risen to 63.7 percent from 55.0 percent.

The Hang Seng China Enterprise Index (H-share Index) includes all the H-share companies in the 200-stock Hang Seng Composition Index.

According to the press release, following the review of the Hang Seng Composite Index, Bank of China will join the index, while Southern Airlines and BYD Co will be removed from the index. The total number of constituent stock in the H-share will drop from 38 to 37 after review.

Source: Xinhua