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HKSI PrepStudyingPaper 1
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Bauhinia Tech Ltd, listed on GEM, has a market capitalisation of HK$6 billion. Which statements are CORRECT? I. It can join the Hang Seng Composite Index. II. Mainland investors can buy it through Southbound trading. III. Its continuing obligations are similar to a Main Board issuer's.
Statement I is wrong: the Hang Seng Composite Index universe is securities listed on the Main Board only (HSCI methodology section 3.1), so size does not help a GEM stock. Statement II is wrong: Southbound trading covers Main Board stocks and ETFs only, and stocks listed on GEM are excluded; the HK$5 billion test applies to Hang Seng Composite SmallCap constituents, which are all Main Board stocks. Statement III is correct: HKEX describes GEM as having lower entry criteria but continuing obligations similar to the Main Board's. Source: HSIL Hang Seng Composite Index Series methodology v2.5 (September 2025) s.3.1; HKEX Stock Connect Information Book for Investors (6 July 2026) s.3.3; HKEX GEM page (as at October 2026).
Applying the HK$5 billion Southbound size test to a GEM stock. That test applies only to Main Board HSCI SmallCap constituents.
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