Hong Kong Exchanges and Clearing Ltd (HKEx), operator of Asia's largest listed bourse, will launch a mini H-share index next year to monitor Hong Kong-listed small and medium-sized mainland companies.

"As HKEx receives increasingly more applications from mainland small and medium-sized companies to float shares, we will launch an additional index to reflect the market performance more accurately," said Paul Chow, chief executive of HKEx, yesterday.

The Mini H-shares Index (Mini-HHI) Futures will be launched in the second quarter of 2008. One-fifth the size of the H-shares Index (HHI) futures, the Mini-HHI could provide a trading and hedging tool on H shares for retail customers who have less risk capital.

Some 45 of the exchange's 71 newly listed companies for the first 11 months are from the mainland, accounting for 59 percent of total market capitalization in the period.

As most large mainland firms have already floated their shares in Hong Kong, the city's bourse is embracing an influx of smaller IPO (initial public offering) candidates.

Mainland companies listing on the main board in Hong Kong recorded turnover of HK$7,116 billion, accounting for nearly 47 percent of the total equity turnover, for the 11 months ended on November 30, according to HKEx.

The mini index was "a must" because small and medium-sized mainland companies' performance provides an economic barometer and they are major contributors to the country's GDP (gross domestic product), said Baniel Cheung, a lecturer in business and economics at the University of Hong Kong.

"Large-scale enterprises may lead the development of industries, but it is their smaller peers who make a significant contribution to the economic development," said Cheung.

A more systematic monitor is needed, as "H-share companies are now the leading players of Hong Kong stocks", said Andrew To, a senior analyst at Taifook Securities.

HKEx is one of the largest listed exchanges in the world, established by the Hang Seng Index in 1969.

The company has gradually launched sub-indexes to classify stocks - a finance index for banks listed in Hong Kong, a properties index and the H-share index, representing all mainland companies.

HKEx recorded a better-than-expected performance this year.

"Funds raised by initial public offerings so far this year have overtaken the amount recorded last year, excluding the ICBC's massive IPO last year," Chow said yesterday.