Understanding the Hang Seng Index

Synopsis:
The article explores the Hang Seng Index (HSI), covering its structure, major components, and investment methods. It reviews the HSI's historical performance, highlighting its response to global economic events. The piece also discusses China's market potential and recent economic measures, emphasising the HSI's significance in investment strategies.

What is the Hang Seng Index?

The Hang Seng Index (HSI) is a market-capitalization-weighted Hong Kong Exchange (HKEx) index, encompassing the largest traded companies. Serving as a key equity market indicator for Hong Kong and broader Asian markets.

HSI's inception dates back to 1969, with a base period starting on July 31, 1964, and an initial value of 100. Representing around 65% of the total market capitalization, HSI aims to mirror the Hong Kong Exchange's leadership. Given Hong Kong's unique administrative status in China, the close economic ties between the two regions are reflected in the significant presence of Chinese companies listed on the HKEx.

The Hang Seng Index Structure

The Hang Seng Index (HSI) tracks the performance of the 50 biggest companies listed on the Hong Kong Stock exchange (HKSE). These companies are chosen based on their size (market value), trading activity (volume), and how well they represent different sectors of the Hong Kong stock market.

The HSI is a market-capitalization-weighted index. To prevent any single company from having too much sway over the index, a cap of 8% is applied. This means no company can account for more than 8% of the HSI's total value.

Industries and Components

The individual industries covered by the HSI, along with their weights, are:

Top Holdings

As of February 2024, the weightings are: (all the stock are backlinked from Trading View)

How do you put money into the Hang Seng Index? (What are the different ways to invest in the Hang Seng Index?)

Investing in the Hang Seng Index (HSI) can be done in several ways including through Exchange-Traded Funds (ETFs) or index funds that track the performance of the HSI. These financial instruments replicate the index's composition, allowing investors to invest in a diversified portfolio of the stocks that make up the HSI. .

Synopsis:
You can put money into the HSI through - ETFs like Krane Shares CSI China Internet ETF and ishare MSCI China ETF. These Instruments are available for trading on the Century Trader platform.

Some other ways of investing in the index include investing through futures and options contracts and structured products.

Historical Performance Trends of the Hang Seng Index

Source: Bloomberg

The chart above provides an illustrative overview of the Hang Seng Index's historical performance, highlighting key periods and trends. Here's a more data-driven perspective on these periods: