PREVIEW-HK's main stock index seen unchanged after review

By Alison Leung

HONG KONG, May 8 (Reuters) - The compiler of Hong Kong's Hang Seng Index .HSI is expected to leave the benchmark gauge unchanged after a review, but one wild card could be the inclusion of Chinese property developer Country Garden (2007.HK).

The blue-chip index currently has 43 constituents, below its limit of 50.

Compiler HSI Services Ltd, which bases its criteria on market capitalisation, trading turnover and the proportion of the firm's shares that are freely traded, is expected to announce the results of its quarterly review on Friday.

"There are no counters big enough and immediately eligible to be added into the Hang Seng Index this time," said Kenny Tang, associate director at Tung Tai Securities.

A stock that is included in or deleted from the index would trigger corresponding buying or selling by fund managers who weigh their performance against the benchmark.

Many global investors look to Hong Kong-listed stocks as a way to tap China's booming growth, as overseas investment in mainland shares themselves is still highly restricted.

Goldman Sachs said it also saw a limited chance of an index reshuffle.

But while BNP Paribas said it expected no deletions, it forecast Country Garden, which was listed in April 2007 and has a market value of HK$110 billion ($14.12 billion), would be added.

Country Garden ranked 19th by average 12-month market capitalisation and 39th by average 12-month daily turnover, it said in a recent research note.

But Ernie Hon, an analyst at ICEA Securities, said a sharp drop in Country Garden's shares meant it was unlikely to be added to the index for now.

Country Garden's shares have dropped 27 percent this year amid China's efforts to cool the property market, lagging an 8 percent fall in the benchmark index.

Mainland Chinese companies command about half of Hong Kong's roughly $2 trillion market cap and more than 60 percent of total trading volume. ($1=HK$7.793) (Reporting by Alison Leung; Editnig by Kim Coghill)