Asian Media Stocks Face $10M Trading Volume Bar for Index Inclusion
MSCI's $10M daily trading threshold systematically excludes media companies from Asian indices while tech giants drive benchmarks. Why index construction matters for sector visibility.
Asian equity indices posted their strongest annual gains in years during 2025, but the rally was overwhelmingly driven by technology and semiconductor giants rather than media sector stocks. The Hang Seng Index climbed 28%, its best performance since 2017, while the Kospi surged 75.7% and Taiwan's Taiex rose 26.9%.
The gains highlight how index construction methodologies systematically exclude smaller media companies while amplifying the influence of large-cap technology firms. This creates a significant gap between actual media sector activity and what major indices reflect.
Large Technology Firms Drive Benchmark Returns
Alibaba's stock jumped 73% to 75.7% during 2025, while Tencent gained 44%. Together, these two companies accounted for a substantial portion of the Hang Seng Index's annual return. Samsung's 127% surge similarly powered the Kospi's record-breaking year.
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Meanwhile, smaller media stocks including publishers and content companies remain largely absent from major Asian benchmarks. Index providers use liquidity screens that filter out companies failing to meet minimum trading volume thresholds. The S&P Asia Property 40 requires at least US$1 million in average daily trading volume for inclusion. MSCI's AC Asia Pacific indices apply an even stricter filter, requiring three-month average daily trading volume of at least US$10 million.
These thresholds effectively exclude most media sector companies from index representation, regardless of their business performance or strategic importance.
Float-Adjusted Calculations Favor Technology Megacaps
Beyond liquidity screens, Asian indices use float-adjusted market capitalization weighting that amplifies the influence of the largest publicly traded companies. The STOXX Asia/Pacific 50 focuses exclusively on blue-chip supersector leaders, structurally prioritizing technology and industrial firms over media companies.
This methodology means a 1% move in Alibaba or Tencent creates significantly larger index movements than comparable percentage changes in smaller media stocks. The mathematical reality of market-cap weighting ensures that companies with trillion-dollar valuations drive benchmark performance, even when hundreds of smaller firms collectively represent substantial economic activity.
Even thematic indices designed to capture emerging trends face similar structural biases. The MSCI AC Asia Pacific Select Megatrend Index uses media sentiment scores from approximately 100 sources to rank investment themes monthly. However, the index still applies the same US$10 million daily trading volume threshold, excluding smaller media companies despite their potential alignment with high-scoring trends.
Implications for Investment Capital Allocation
The disconnect between index composition and actual sector dynamics has practical consequences for capital flows. Institutional investors who track Asian equity benchmarks allocate funds based on index weightings, directing capital primarily toward technology megacaps while media sector companies remain underrepresented in portfolio allocations.
Hong Kong and mainland China stocks posted their second consecutive year of gains in 2025, but these returns were concentrated in a narrow group of large technology and semiconductor companies. Communications strategists evaluating industry health need to distinguish between headline index performance and underlying sector trends that may not appear in benchmark calculations.
The structural exclusion of smaller media firms from major indices means their performance remains largely invisible to investors who rely on benchmark data for market assessment, even when these companies generate significant business results or represent important industry developments.
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