Changes to the Hang Seng index could help investors diversify risks, strategist says

SectorFinancial Markets
CountryMiddle east

This week's announcement about a shakeup in Hong Kong's stock index is a "positive move" that could help diversify risks, according to Somerset Capital Management's Min Chen. "We believe that (the Hang Seng Index's) new methodology will be a good way to prevent overconcentration in the risks and it's very effective to help the passive investors," Chen, portfolio manager of China strategy at the firm, told CNBC's "Street Signs Asia" on Tuesday. Passive investing is a long term investment strategy aimed at minimal trading, and often involves buying into funds that track market barometers. His comments came after Hang Seng Indexes Company, the compiler of the index, announced Monday it would tweak the main Hong Kong stock benchmark. The decision came after a month-long consultation exercise with its stakeholders, the company said. In a press release, Hang Seng Indexes outlined five main changes to the Hang Seng Index. The changes will be implemented starting from the index review in May: "The new enhancements to more...