The latest periodic adjustment to the Shanghai and Shenzhen Stock Connect programs officially took effect on September 7th. In this round, 54 Hong Kong-listed companies were added while 15 were removed. Scanning the list, the immediate takeaway is a systematic strengthening of new-economy sectors, with new additions concentrated along three main threads: biotech, AI and semiconductors, and high-end equipment manufacturing. This structural reshaping deserves close attention, as each adjustment fundamentally redraws the investable boundary for southbound capital. Who gets in, who must wait, and where the threshold actually sits can all be calculated with reasonable precision.
Demystifying the inclusion process
The mechanism for gaining Stock Connect access may seem complex, but it boils down to two clear criteria. First is index membership. Constituents of the Hang Seng Composite LargeCap and MidCap indices are generally eligible for direct inclusion, representing the primary pathway. Meanwhile, constituents of the Hang Seng Composite SmallCap index must satisfy an additional market capitalization requirement. Second is the market cap threshold. Under current rules, small-cap index constituents need a trailing 12-month average month-end market cap of no less than HK$5 billion to qualify. However, a commonly overlooked point is that HK$5 billion merely serves as the regulatory floor, while the actual threshold is dynamic, built on trailing 12-month average market cap data and set via a floating benchmark based on cumulative market cap coverage under the index rules. Institutional estimates place the threshold at around HK$9.307 billion as of December 31, 2025, which has already risen to approximately HK$10.156 billion by June 30, 2026. In other words, the effective bar is more than double the HK$5 billion regulatory minimum. Timing also matters. There are four scheduled reviews each year, in March, June, September, and December, with the March and September sessions involving large-scale batch changes and the June and December sessions being smaller adjustments. The data cut-off dates are June 30th and December 31st, with announcements following in late August and February respectively, taking effect in September and March. Therefore, when assessing a company for potential inclusion, the focus should be on its 12-month average market cap leading up to the benchmark date, along with the next available effective window.
Why some 'near-guaranteed' candidates deserve deeper study
The inclusion list is an outcome, but spotting candidates on the verge of qualification before they appear is where the real value lies, as valuation re-rating driven by improved liquidity typically occurs ahead of inclusion rather than after. Applying this logic across small-cap Hong Kong listings with market caps hovering near the threshold reveals several names worth tracking individually. Starting with examples that have already cleared the path: Lightelligence Technology (01879) debuted on the Hong Kong Stock Exchange main board on April 28, 2026, as the world's first listed AI silicon photonics company, securing Stock Connect inclusion on September 7th just over four months after its IPO, making it a rare opto-electronic hybrid computing play in Hong Kong, with optical interconnects addressing high-speed data transfer between GPU clusters and optical computing attempting matrix operations via photons. Its first-half 2026 revenue hit RMB 79.78 million, up 284% year over year, with notable volume expansion following inclusion. Meanwhile, Transwarp Technology (06727) listed on September 21st as a Chapter 18C specialist technology company, becoming the first A-share firm to complete a secondary listing in Hong Kong under that rule, and it gained Stock Connect access on its very first trading day, bypassing the need to wait for periodic reviews entirely. From same-day inclusion to a four-month qualification path and legacy stocks awaiting the next window, these cases consistently reinforce a trend: institutional acceptance of quality new-economy players, especially in the computing power space, is accelerating.
One name still awaiting the final step: GBA AI COMP (01396)
It did not appear on the September list. Applying the rules, the bottlenecks come down to two main hurdles: the trajectory toward the 12-month average market cap requirement and holding Hang Seng Composite Index constituent status. Tackling the first hurdle, the Stock Connect assessment relies on a rolling 12-month average market cap leading up to the review date. For the September session, that window spans July 2025 through June 2026, yet this company's share price appreciation occurred mainly in 2026, with a gain of over 120% year to date. Looking forward: the average daily market cap for the first seven months already exceeded HK$13.5 billion, and has climbed above HK$17 billion since August. Even under a conservative assumption that trading remains stagnant, the 12-month average would land between HK$14.5 billion and HK$15.5 billion, providing ample cushion against the current HK$10.156 billion threshold. Time is on its side. The more likely explanation is that Hang Seng Composite Index constituent status requires periodic alignment across several dimensions. The company has been addressing exactly those gaps over the past six months: joining the MSCI China Small Cap Index in February 2026, completing a name change in May, and being reclassified by Hang Seng Indexes into the Information Technology — Internet Services and Infrastructure sector in June, meaning its industry classification, index affiliation, and core business have only now been fully aligned. As of now, GBA AI COMP (01396) is not yet included in Stock Connect. Based on current inclusion rules and its prevailing market cap, the most probable window for entry is the first trading day of March 2027. However, rather than merely waiting for that Stock Connect acceptance notice, a more productive approach is to focus on the company's underlying business fundamentals, since Stock Connect is better viewed as the opening step toward unlocking southbound liquidity rather than the endpoint of its share price thesis. For the first half of 2026, the company posted revenue of RMB 2.56 billion, a tenfold surge year over year, with AI-related revenue accounting for 93.1% of the total. It holds indicative AI computing orders exceeding RMB 37 billion, of which more than RMB 20 billion have been delivered and are generating steady billings. Whether these operational metrics continue to materialize will be the decisive factor in determining the valuation market participants assign it after inclusion and how far the stock can ultimately run.
In the new Stock Connect adjustment that took effect September 7, 2026, the 54 newly included stocks displayed a significant breadth of losses on their first day, with the latest data showing 42 stocks declining, roughly 78% of the total, while only 12 managed gains, a winning rate of approximately 22%. In other words, inclusion resolves the question of who is allowed to buy, whereas earnings performance resolves the question of why the stock deserves to be bought.
Why Stock Connect inclusion merits attention
Many investors dismiss inclusion as a mere trading permission expansion, but the actual implications run across multiple dimensions. One is incremental capital. Stock Connect serves as the primary conduit for mainland mutual funds, insurers, and retail investors to allocate to Hong Kong shares. Following inclusion, passive index funds are required to purchase, while active managers begin coverage, making a rising southbound ownership ratio a typically observable leading indicator. Another is valuation convergence. Hong Kong-listed small and mid caps have long suffered a liquidity discount, and after entering Stock Connect, their pricing logic shifts closer to the valuation anchors of comparable A-share companies in the same sector, with the discount narrowing itself representing a source of excess returns.
Final thoughts
I prefer to view each Stock Connect adjustment as a periodically refreshed list of value candidates. Companies already on the list have cleared the market's first filter, while those outside that have secured index membership, are delivering on earnings, and hold up on market cap basis represent the next wave of capital entry points. The calculation involved is far from complicated; the real challenge lies in maintaining patience amid noisy market conditions. The rule-based windows are fixed, leaving the rest to time.
This article is adapted from the "Hong Kong Stock Connect" WeChat account, originally authored by Tianxing; edited by Zhiyuan Finance correspondent Xu Wenqiang.