What is the Hang Seng Index (HSI)?
The Hang Seng Index (HSI) is a market capitalization-weighted index of the top sixty Hong Kong Exchange (HKEx) businesses without restrictions. Its market valuation was over $38 trillion in 2022, making HKEx one of the biggest stock exchanges.
It is Hong Kong’s benchmark equity market index and a barometer of Asian markets.
Know the Hang Seng Index
The Hang Seng is Hong Kong’s most regularly reported economic indicator and a market benchmark for investors. Since Hong Kong is a unique administrative territory of China, there are strong economic linkages between the two economies, with numerous Chinese firms listed on the Hong Kong Exchange.
To represent the leadership of the Hong Kong exchange, the index encompasses around 65% of its overall market capitalization.
Hang Seng Index Structure
The Hong Kong Stock Exchange (HKEx) calculates and immediately distributes the HSI, a free-float-adjusted market capitalization-weighted index, at two-second intervals during trading hours. The HSI is a price index without cash dividends or warrant bonus modifications.
An 8% cap prevents a single stock from dominating the index. The index aims for 60 stocks, although its composition can change. In April 2022, the index included 66 stocks. Quarterly committees analyze index components and select which firms to add or eliminate.
Alibaba, Tencent, Industrial and Commercial Bank of China, Meituan, and China Construction Bank dominate the Hang Seng Index.
Hang Seng members belong to the sub-indices of trade, industry, finance, utilities, and properties.
The Hang Seng HK 35 index only includes the top 35 Hong Kong businesses that make most of their money outside China. Around 500 stocks comprise the Hang Seng Composite, representing the top 95% of Hong Kong exchange equities by market size.
Since 1969, a division of Hang Seng Bank has maintained the Hang Seng Index.
Hang Seng Parts
April 2022 Hang Seng Index top 30 holdings (in no particular order):
- Mengniu Dairy Limited, China
- CITIC Limited
- Techtronic Industries Ltd.
- Chinese Industrial and Commercial Bank Limited
- Petrochemical Corporation of China
- Limited New World Development Company
- CLP Holdings
- Hong Kong-China Gas Limited
- Limited CSPC Pharmaceutical Group
- Limited Galaxy Entertainment Group
- Hengan International Group Ltd.
- Henderson Land Development Ltd.
- China Resources Land Ltd.
- CK Infrastructure Holdings
- ENN Energy Ltd.
- China Life Insurance Limited
- Sport Products Limited
- CNOOC Limited
- Spring Nongfu Co., Ltd.
- The Li Ning Company
- Limited Lenovo Group
- Lung Hang Properties Ltd.
- Country Garden Services Holdings Limited
- Xiaomi Corp.
- AAC Tech Holdings
- Wuxi Biologics (Cayman) Inc.
- Alibaba Health IT Limited
- Meituan
- Inc. JD.com
- Alibaba Holding Ltd.
How many stocks does the Hang Seng Index have?
The Hang Seng Index (HSI) includes the 60 most extensive Hong Kong Stock Exchange stocks; however, there may be more or less. For example, the Hong Kong Exchange lists 2,500 company stocks.
Investment in the Hang Seng Index: How?
If you don’t reside in Hong Kong, you can invest in the HSI using Hong Kong ETFs like the iShares MSCI Hong Kong ETF (EWH) and the Franklin FTSE Hong Kong ETF (FLHK). KraneShares Hong Kong Tech ETF (KTEC) follows 30 Hang Seng Composite high-tech equities.
Which Asian stock market is the largest?
The Shanghai Stock Exchange in mainland China is second in Asia behind Japan’s stock exchange. Third is the Hong Kong Exchange, then the Shenzen Exchange.
Conclusion
- A benchmark for Hong Kong blue-chip equities is the Hang Seng Index (HSI).
- The index has industrial, finance, utilities, and real estate investment trust subindices.
- With a 10% weight limit for any component, the index utilizes free-float market capitalization weighting.
