According to the quarterly review results announced by Hang Seng Indexes Company on February 13, the adjustments will officially take effect starting March 9 (next Monday). Following the implementation of the index adjustments on March 9, the Shanghai and Shenzhen stock exchanges will subsequently adjust the scope of eligible securities for the Stock Connect schemes accordingly, with the specific timing to be determined by the exchanges.
Ahead of the impending March adjustments to the Hong Kong Stock Connect, a total of 44 stocks are anticipated to be newly included. This compilation, based on changes to the composite index and the Hang Seng Stock Connect Index announced by Hang Seng Indexes Company, combined with predictions from various brokerages, is provided for investor reference. The final, accurate list of changes to the Hong Kong Stock Connect should be confirmed based on official announcements from HKEX, SSE, and SZSE.
Considering the requirements for constituents of the Hang Seng Composite Index and the additional criteria for inclusion in the Hong Kong Stock Connect—such as a minimum market capitalization of HK$5 billion for small-cap constituents in the Hang Seng Composite Index, the exclusion of companies under risk warnings or delisting procedures, and specific conditions for companies with weighted voting rights (including being listed for at least six months and twenty days, along with meeting market capitalization and turnover thresholds)—approximately 44 stocks are likely to meet the eligibility criteria this time. These include: Bank of East Asia (00023), CTF Services (00659), Deepexi Tech (01384), Softcare (02698), Chuangxin Ind (02788), Qifu Technology-S (03660), JD Industrials (07618), Insilico (03696), 160 Health (02656), Zhonghui Bio-B (02627), Baoji Pharma-B (02659), PegBio-B (02565), Jingfang Pharma-B (02595), and Xuanzhu Bio-B (02575), among others.
The list comprises two main categories: first, seven companies that are constituents of the Hang Seng LargeCap/MidCap Indexes and are certain to be included in the Hong Kong Stock Connect; second, 37 other companies that have a high probability of being included.
It is important to note that while HASHKEY HLDGS (03887) and OSL GROUP (00863), as newly listed virtual asset platforms, meet the traditional inclusion criteria based on metrics like market capitalization coverage and turnover rate, their status as virtual asset platforms introduces uncertainty, and investors should be aware of potential variations in their inclusion.
Additionally, some companies may be included due to other circumstances: Nanhua Futures (02691), due to its A+H share dual-listing structure, was directly included in the Hong Kong Stock Connect on January 19 following the end of its 30-day price stabilization period. Similarly, Haowei Group (00501) and Zhaoyi Innovation (03986), as A+H companies newly listed in Hong Kong this January, are also expected to be included successively after their respective stabilization periods conclude.
Regarding companies with weighted voting rights (WVR): Geekplus-W (02590) was included in the Hong Kong Stock Connect on February 6 this year. Hesai-W (02525) is anticipated to be included in April. Meanwhile, Minglue Tech-W (02718), Pony.ai-W (02026), and WeRide-W (00800), having listed last November, are expected to become eligible in the second half of this year.
The adjustment window for Hong Kong Stock Connect changes has historically shown a significant "inflow effect." Reviewing adjustments since February 2017, stocks newly added to the Connect have demonstrated significant and stable excess returns relative to the Hang Seng Index during the window between the trading day after the Hang Seng Composite Index adjustment announcement and the effective date.
Market participants attribute this phenomenon to several factors: passive buying by ETFs tracking the index due to constituent changes; increased buying interest from southbound funds accessing the newly eligible stocks; speculative trading based on the inclusion theme; and, for some newly listed additions, a relatively small float of actively traded shares leading to amplified price movements.
Historical performance indicates that Hong Kong Stock Connect adjustments significantly impact the liquidity and share price trends of involved stocks. For example, during the September 2025 adjustment, according to LiveReport big data statistics, the average trading volume for the 20 newly included stocks surged approximately 4.3 times on the effective date (September 8, 2025) compared to their previous average daily turnover.
Taking Country Garden (02007) as an example, its average daily turnover before "re-inclusion" was less than HK$50 million. By the trading day before inclusion, it had surpassed HK$100 million. On its first inclusion day, September 8, 2025, turnover skyrocketed to HK$485 million, about ten times the pre-inclusion average, with its share price rising 6.25%, significantly outperforming the Hong Kong Mainland Property Index, which gained only 1.54% that day. On the following trading day, Country Garden continued its strong performance, with volume reaching 988 million shares and turnover hitting HK$592 million within just the first hour of trading, exceeding the full-day level of the inclusion day.
Commenting on this performance, Yuan Mei, Investment Research Director at Sullivan Jelly (Shenzhen) Cloud Technology Co., Ltd., noted that Country Garden genuinely benefited from improved liquidity among the inclusion candidates and exhibited a typical "catch-up" characteristic as its share price had not risen significantly prior to inclusion.
DualityBio-B (09606) also delivered a standout performance. On the trading day before its inclusion (September 5), its share price had already strengthened, rising 7.14% with a turnover of HK$168 million. On the inclusion day, September 8, its turnover surged to HK$1.394 billion, ranking highest among all newly included stocks. In the subsequent week, the company's share price continued to climb, accumulating gains of over 40%, highlighting significant market enthusiasm.
Several other Hong Kong stocks, such as Naodong Jiguang-B (06681), MIRXES-B (02629), Boleton (01333), and Hushang Auntie (02589), exhibited similar patterns, with both share price volatility and trading volume surging dramatically, often increasing several-fold or even dozens of times compared to pre-inclusion levels.
However, it is crucial to be wary of the "profit-taking" phenomenon following inclusion rallies. For recently listed stocks with a small public float, while they might experience short-term speculative surges due to passive fund buying, they often face sharp corrections once speculative capital exits.
A case in point is Transthera-B (02617). After being included in the Hong Kong Stock Connect, its share price accelerated upwards, surging 20.13% on September 8 alone and rallying over 1,000% at its peak within just a few trading days. Turnover on the inclusion day was HK$196 million, soaring dozens of times compared to its previous average daily turnover. However, starting September 16, Transthera-B's share price plummeted dramatically, plunging 53.73% that day and falling another 12.43% on September 18, causing significant losses for investors who bought near the peak.
Market analysis suggests this clinical-stage biopharmaceutical company showed weaknesses at its IPO in June 2025: it raised only HK$200 million, had highly concentrated share ownership, and its international placement was only 0.95 times subscribed. Post-inclusion, approximately 15 related ETFs, with a combined size nearing HK$50 billion, were required to make passive purchases due to index rules, leading to cumulative inflows exceeding HK$1 billion. Given the company's pre-inclusion average daily turnover of only about HK$15.88 million, the extremely small float was unable to absorb the massive passive buying, directly fueling the short-term price explosion—a 77% gain on September 12 followed by a 116% jump on September 15. The "precipitous plunge" on September 16 was attributed to pre-positioned speculative capital liquidating holdings en masse, taking advantage of the passive buying support. Ultimately, not only retail investors who bought directly through Stock Connect suffered losses, but also investors participating indirectly via ETF funds, both groups effectively becoming the "exit liquidity" for the arbitrageurs.
A similar pattern was observed with Bayzed Health (02609). After inclusion, its trading volatility intensified significantly. On September 12, it surged over 27% intraday, with a daily amplitude exceeding 26%. Over the next three trading days, the amplitude consistently exceeded 50%, and after consecutive strong gains, the share price fell over 10% for two straight sessions.
A previous Huatai Securities research report noted that the most recent Hong Kong Stock Connect adjustment exhibited clear "front-running" behavior. Due to substantial inflows from southbound funds acting as a key marginal source of capital, potential inclusion candidates saw excess returns far exceeding historical averages during the period from the review cut-off date to the announcement date. However, this speculative positioning also led to negative excess returns between the announcement date and the effective date, with pronounced profit-taking by arbitrage capital.
Looking ahead to the current adjustment cycle, Huatai Securities believes trading around Hong Kong Stock Connect inclusions might become more "front-loaded" this year. With a projected slowdown of 20%-40% in marginal inflows from southbound funds, the excess returns for included stocks are likely to be lower compared to 2025 but are still expected to remain above historical average levels.
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