Methodology Change | Solactive China Cloud Computing Index | Effective Date 26/06/2020

Today, on the 22/06/2020, Solactive announces the following changes to the methodology of the following Indices (the ‘Affected Indices’):

Rationale for methodology change

The Affected Indices provide exposure to Chinese companies that are active in the field of cloud computing. Due to the current market conditions, Solactive has determined the following changes to the methodology to diversify the index and make it less concentrated in few constituents.

Changes to the Index Guideline

1. Section 1.5 Weighting: Increasing the weight cap from 6% to 9% to limit the excessive overweighting in smaller companies

Old Version:

On each Selection Day, the components of the Index are weighted according to Free Float Market Capitalization such that the weight of the company does not exceed 6%.

[…]

New Version:

On each Selection Day, the components of the Index are weighted according to Free Float Market Capitalization such that the weight of the company does not exceed 9%.

[…]

• Section 2.1 Selection of the Index Components: Increasing the number of constituents from 20 to 30

Old Version:

The initial composition of the Index as well as any ongoing adjustment is based on the following rules:

On the Selection Days, Solactive determines the securities that are eligible for inclusion in the Index Universe as defined in Section 4. The securities are selected for index inclusion based on the following rules:

a)             Top 15 by total market capitalization rank are selected for index inclusion

b)             Existing constituents with rank from 16 to 25 are selected for index inclusion until the target constituent count of 20 is reached

c)             If there are less than 20 stocks after step b, non-constituents are selected with rank from 16 to 25 until the target constituent count of 20 is reached

New Version:

The initial composition of the Index as well as any ongoing adjustment is based on the following rules:

On the Selection Days, Solactive determines the securities that are eligible for inclusion in the Index Universe as defined in Section 4. The securities are selected for index inclusion based on the following rules:

a)             Top 30 by total market capitalization rank are selected for index inclusion

b)             Existing constituents with rank from 20 to 40 are selected for index inclusion until the target constituent count of 30 is reached

c)             If there are less than 30 stocks after step b, non-constituents are selected with rank from 20 to 40 until the target constituent count of 30 is reached.

• Section 4 Definitions: Introduction of 6 months minimum listing history to avoid companies without sufficient trading history
• Index Universe

Old Version:

The “Index Universe” in respect of a Selection Day are companies headquartered in China or Hong Kong that fulfil the following criteria:

1.              Should be listed on one of the following exchanges:

a)             Hong Kong: HKEX

b)             Stock Connect: Shanghai and Shenzhen

c)             US: NYSE and NASDAQ

[…]

New Version:

The “Index Universe” in respect of a Selection Day are companies headquartered in China or Hong Kong that fulfil the following criteria:

1.             Should be listed on one of the following exchanges and should have listing history of at least 6 months:

a)             Hong Kong: HKEX

b)             Stock Connect: Shanghai and Shenzhen

c)             US: NYSE and NASDAQ

[…]

Defined terms used in this announcement, but not defined herein, have the meaning assigned to them in the respective index guideline of the Affected Indices. The amended version of the index guideline will be available on the effective date.