Updated: the Hang Seng operator said onAug. 22 that Pop Mart will join the Hong Kong Stock Exchange's main index from Sept. 8. It will also include China Telecom and JD Logistics.

Pop Mart and companies from the health care sector may enter the Hang Seng Index, Hong Kong's main stock index. Analysts note that the toy manufacturer tripled its capitalization amid the excitement around Labooboo dolls, and health care stocks strengthened their positions due to scientific breakthroughs and partnerships.

Details

Hang Seng Indexes Co. which manages Hong Kong's main stock index, the Hang Seng Index (HSI, a peer of the U.S. S&P 500), may include collectible toy maker Pop Mart and several health care companies, according to analysts surveyed by Bloomberg.

Results of the quarterly index revision are expected after the close of trading on Friday, August 22.

What attracts analysts to Pop Mart

Pop Mart, which became known for its frenzied demand for Labooboo dolls, has long been considered a candidate for inclusion in the index. The company's market capitalization has risen more than 250% this year amid strong demand for toys and figurines, Bloomberg notes.

"Pop Mart ranks very high in terms of capitalization and turnover," said Janagan Jayakumar, an analyst at Quiddity Research.

Periscope Analytics founder Brian Freitas and China International Capital Corp. (CICC) analyst Kevin Lew also named the toy maker as a likely candidate for HSI.

This week Pop Mart published a strong report for the first half of the year, after which the company's shares rose by more than 5% on the Hong Kong Stock Exchange (HKEX). The main session of Friday, August 22, closed with a growth of almost 0.2%.

Why analysts are betting on healthcare stocks

Healthcare stocks also strengthened, thanks to scientific breakthroughs and international partnerships that have bolstered the sector's position, Bloomberg writes.

Both Jayakumar and Freitas believe that companies from the healthcare sector will play a key role in the revision. Freitas clarified that this industry is underrepresented in the index, although the HSI's goal is to cover at least 50% of each industry's capitalization. He predicts the inclusion of skincare developer Giant Biogene in the HSI.

Who else was singled out by the experts

Among other possible candidates for inclusion in HSI, Freitas named:

- Kingsoft (software and cloud services);

- China Telecom (one of the largest telecom operators in the PRC);

- JD Logistics (a logistics company, a subsidiary of retailer JD.com);

- Cosco Shipping Holdings (one of the world's largest shipping operators).

Why it's important

A revision of the Hang Seng Index's composition shows which companies have done better in terms of capitalization and turnover, Bloomberg writes.

Getting into the index attracts investment from funds tracking its performance, as well as interest from mainland Chinese investors.

HSI's goal is to increase the number of companies from 85 to 100, but analysts say the committee is in no hurry to expand and balance the industries.

This article was AI-translated and verified by a human editor

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