SpaceX to join Hang Seng tech gauge as 8th US-listed member

Hang Seng Indexes will add SpaceX to its Hong Kong-US Tech Index upon the rocket company's listing, folding Elon Musk's space venture into a gauge alongside Apple, Nvidia and five other US technology megacaps.

"The inclusion reflects how SpaceX has evolved from a pure-play space contractor into a diversified technology infrastructure company with revenue streams spanning satellite communications, launch services and government contracts," said Stephen Innes, managing partner at SPI Asset Management.

The 8 US-listed components will be rebalanced to equal weight after SpaceX's seventh trading day, with the new composition taking effect on the 11th trading day, Hang Seng Indexes said in a statement Wednesday. The change is conditional on SpaceX completing its listing. The index currently tracks seven US megacaps — Apple Inc., Microsoft Corp., Nvidia Corp., Amazon.com Inc., Alphabet Inc., Meta Platforms Inc. and Tesla Inc. — alongside Hong Kong-listed technology stocks including Tencent Holdings Ltd. and Alibaba Group Holding Ltd.

The inclusion opens a new channel for passive investment flows into SpaceX shares, as funds tracking the gauge will be required to hold the stock at roughly 12.5% alongside the other US components. It also marks one of the first instances of a space company being added to a mainstream technology benchmark, potentially setting a precedent for broader index inclusion of space-related equities.

The Hong Kong-US Tech Index, launched in 2020, tracks the 30 largest technology companies listed in Hong Kong plus the US-listed tech giants. Adding SpaceX expands the US component beyond the so-called "Magnificent Seven" that have dominated equity returns over the past two years, with Nvidia alone surging more than 500% since the start of 2023.

The announcement comes as technology shares rally globally, driven by artificial intelligence infrastructure spending. South Korea's SK hynix jumped 11% Wednesday to reach a $1 trillion market capitalization, becoming one of only three Asian companies at that threshold alongside Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co., according to Bloomberg data.

"AI demand is no longer just about chips powering large language models. It is now about the memory systems required to feed those models at industrial scale," Innes said.

SpaceX, which operates the Starlink satellite network with more than 6,000 active satellites and develops the Starship launch system, has been valued at roughly $350 billion in private transactions, according to Bloomberg. The company's inclusion in a major index upon listing would mark a milestone for the space economy, which Morgan Stanley has estimated could generate $1 trillion in annual revenue by 2040.

The equal-weight structure means SpaceX will carry the same index weighting as Nvidia and Apple, a departure from market-cap-weighted benchmarks where the largest stocks dominate. That structure could increase the stock's impact on index performance relative to its market capitalization, potentially attracting greater attention from active managers who track the gauge.

The move also highlights Hong Kong's efforts to maintain relevance as a cross-border investment hub, with the Hang Seng Hong Kong-US Tech Index serving as a bridge between US-listed tech giants and Chinese technology companies trading in the city. The index had a total market capitalization of roughly $10 trillion as of the latest rebalancing, according to Hang Seng Indexes data.

This article is for informational purposes only and does not constitute investment advice.