Hang Seng Index

Hang Seng Index CFDs trading at Friedberg Direct

An Overview of China’s Financial Engine – HSI

With a market cap weighted index of 40 of the largest companies traded to date on the Hong Kong Exchange, the Hang Seng Index (HSI) is one of Asia’s biggest indices.

Maintained by the Hang Seng Bank, the HSI has been published since 1969 and is the leader of the HKE, covering 65% of its market capitalization. HS members are also classified into one of four sub-indices that include the commerce, utilities, properties and finance industries.

The Hang Seng is the most widely quoted barometer for the Chinese stock market and the Hong Kong economy. As Hong Kong’s status is known as a special administrative region of China, there are close ties between their economies and a lot of Chinese companies are listed on the Hong Kong Stock Exchange, still held in majority by the British financial firm HSBC.

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Hang Seng Index Trading information

  • MT4 Symbol: HSI
  • Trading Time: 01:15-03:59 & 05:00-08:29 & 09:15-17:45
  • Country: Hong Kong
  • Currency: HKD
  • Exchange: HKE

Interesting facts about the HS Index

The Hang Seng Index was first published on the 24th of November 1969 and it is, to this day, the largest indicator of overall market performance in Hong Kong. There are several indices belonging to the Hang Seng indices family including the Hang Seng China Enterprises Index, Hang Seng China AH Index Series, Hang Seng China H-Financials Index, Hang Seng Composite Index Series, Hang Seng China A Industry Top Index, Hang Seng Corporate Sustainability Index Series and Hang Seng Total Return Index Series.

The chairman of the Hang Seng Bank, Ho Sin Hang conceived the idea of creating the Hang Seng Index as the “Dow Jones” of Hong Kong. Upon publication, its base of 100 points was set equivalent to the stocks’ total value as of market close on 31 July, 1964.

The all-time low this index experienced was 58.61 points on August 31, 1967. Later the base value was established and the Hang Seng passed the 10,000-point milestone on October 18th, 2007, while reaching its all-time high a few days later, on the 30th of October 2007, at 31,958.41 points.

Another innovation was the 2014 Hong-Kong – Shanghai – Shenzhen Stock connect, which allows international and Chinese investors to trade mainly A-shares listed on each other’s markets through the 3 respective exchanges, which was followed by a 5000 point increase in the Hang Seng over a 3-month period, and a doubling of the Shenzhen Composite to 3140 over the same period.

Index Composition of the HSI

 

Top 5 on the Hang Seng Index

Name of Company Industry Weight (%)
HSBC Holdings Financials 10.29
Tencent Information Technology 9.59
AIA Financials 8.51
CCB Financials 8.24
China Mobile Telecommunications 5.15

 

Sector Representation in HSI

Sector Weight (%)
Finance 48.71%
Properties and Construction 11.49%
Information Technology 10.96%
Telecommunications 5.95%
Energy 5.61%

 
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Index Formula

HSI calculation formula

The factors influencing the overall index price of the HSI

As with other indices, there are many macro and micro-economic factors that can influence the Hang Seng Index. As it has a close correlation to the Chinese economical current, the Chinese market has a great and almost immediate impact on the index. One economic shift for example would be the Yuan/Dollar peg being removed not in its entirety, as they will be pegging it to a basket of currencies and not just the USD.

The impact of the Yuan devaluation in August 2015 by the People’s Bank of China (PBOC) shook the markets with three consecutive devaluations of the Yuan Renminbi (CNY) remaining 30% the currency lower than its previous value.

With the CNY/USD peg being removed as well as the Yuan devaluation (as explained above) experts are confident these changes did add value to the country as well as boosting the economy. These changes did have a direct effect and impact on the Hang Seng Index.

Political events have an equal role to play. Even when they are not in direct correlation to the HSI, they do influence index price dynamics. The best example is the announcement of Brexit that led to a 1000 point drop in the Index.

Advantages of trading the HSI with Friedberg Direct

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