Chinese Equity Market: 2001 Vs 2021

Are there any changes in these 20 years?

Kate Lin, CAIA 17 May, 2021 | 8:00
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Changing chart

 

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.

HK market 20 years

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.

Shanghai market 20 years

 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Alibaba Group Holding Ltd Ordinary Shares117.00 HKD1.56Rating
China Mobile Ltd48.85 HKD-0.10Rating
CK Hutchison Holdings Ltd52.65 HKD-0.94Rating
Hong Kong Exchanges and Clearing Ltd367.80 HKD-0.70Rating
HSBC Holdings PLC49.10 HKD-3.54Rating
JD.com Inc Ordinary Shares - Class A250.00 HKD-3.92Rating
Jiangsu Hengrui Pharmaceuticals Co Ltd39.42 CNY-2.69
Kweichow Moutai Co Ltd2,002.00 CNY-1.53Rating
Meituan195.90 HKD-0.91Rating
NetEase Inc Ordinary Shares142.30 HKD-1.93Rating
Tencent Holdings Ltd347.60 HKD-0.34Rating
Wuxi AppTec Co Ltd Class A113.04 CNY-0.39

About Author

Kate Lin, CAIA

Kate Lin, CAIA  is a Data Journalist for Morningstar Asia, and is based in Hong Kong

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