The Hang Seng Index is the stock market index that currently represents about 50 of Asia’s most capitalized companies on the Hong Kong Stock Exchange.
Hang Seng Indexes Company (a subsidiary of Hang Seng Bank) was created in 1969. It has a total value of 100. The index determines the weighting of companies based on their market capitalization. This is similar to the UK’s FTSE100 or German DAX. This index is not the Dow Jones. That index lists companies based solely on the price per share. The Hang Seng Index has a maximum weighting limit of 10%.
Hang Seng Indexes revealed in March 2021 the increase of the index’s constituent companies to 80 at mid-2022, and eventually to 100 at the end.
The Hang Seng Index does not need to be confused or confused with Hang Seng China Enterprises Index. These indexes track the performance of 50 H.share Chinese mainland stocks listed in Hong Kong.
Hang Seng 50 constituents
The Hang Seng Index is divided into three categories: finance, properties utilities and commerce and industrial. Tencent and Alibaba, which are both Chinese companies, make up the majority of the index’s largest constituents. HSBC, a British-Hong Kong-based bank, and AIA Group (a pan-Asian-based insurance firm) are two other high-profile companies included in the index.
These subcategories are further broken down into a total twelve subcategories. Here is how the Hang Seng Index sectors composition looked at the 6th of July 2021. Notice: As of July 20,21, there were no representatives for the 12 th categorie, Materials.
How often do Hang Seng Index companies alter?
The Hang Seng 50 benchmark index is reviewed each quarter. Companies are admitted/exempted after analysis and consultation from outside. A company must meet the criteria for being selected. This includes market capitalisation, turnover and financial performance.
How is Hang Seng Index calculated
The Hang Seng 50 index is calculated at every second during the Hong Kong Stock Exchange’s trading hours. It uses a freefloat-adjusted formula that considers current prices as well as closing prices. Also, it takes into account issued shares. It also uses an Adjusted Freefloat Factor or (FAF) as well as a Cap Factor. Both are values between 1 and 0. They are adjusted quarterly.
What does Hang Seng Index price refer to?
The Hang Seng 50 is a measure of whether share prices for the index companies are rising or declining. If the Hang Seng 50 has a rising price, this indicates that gains are being experienced by a particular company or group. This is reflected on the overall index’s cost. However, if Hang Seng 50 is declining, that means companies in the index are experiencing a fall in price.
Hang Seng 50’s ranking is based upon a weighted calculation, which is focused on Market Capitalisation. Therefore, share price fluctuations that have a greater effect on the index will be more noticeable.
What influences the Hang Seng Index Index price?
The Hang Seng, like all stockindices, is affected primarily by essential and technically drivers. These drivers are related to the Hong Kong/Chinese business environment as well the international influences.
However, because the majority companies in the index have their headquarters in mainland China the news flow and economic information from the PRC tend to have an impact on the index more than Hong Kong-based events. The US-China relation, HK dollar strength, and economic information can have a profound effect on the price.
Although such drivers may cause the index to move in a certain direction it is unlikely that it will. Therefore traders should take into account how these determining factors inter-relate and not try to isolate any one. Here are some important points to be aware of when trading Hang Seng Index.
US/China relationship
The Hang Seng Index can be strongly influenced by US-China relations. Stifled US-China sentiment can cause market pressure. 2018 was a good example. Speculators worried about China and the US slow progress toward a trade deal saw the Hang Seng Index drop.
Furthermore, Hang Seng telco stocks China Mobile, China Telecom and China Mobile were temporarily delisted from NYSE in 2021. These stocks were deemed to be linked with the Chinese military.
Traders will find it worthwhile to keep an eye on how events such as these unfold in the wake of news events. This is because traders can see how commerce can be affected across the globe by such a relationship.
HK dollar strength
Hong Kong Dollar (HKD), which may indicate potential Hang Seng Index moves is worth paying attention to. The HKD is compared to USD in a range from 7.75 to 7.85.
Hong Kong Monetary Authority, Hong Kong’s central bank buys or sells currency at the limit. This is done to control banking liquidity, capital inflow, and outflow. Hang Seng Index trading at 7.85 or higher may cause capital outflow. The Index’s losses for 2018-2019 show this. But at 7.75, there is a possibility of capital inflow.
Socio-political and economic events
Hang Seng Index traders must follow Chinese GDP figures. Trade balance statistics should also be followed. The Hang Seng Index shot up 1.1% in June 2021 to 29,468 following data that showed an increase of Chinese manufacturing over the preceding month. This provides insight into why such figures should be noted.
Check out our economic calendar for all the latest news about trading.
Average annual returns on the Hang Seng Index
The Hang Seng Index average annual returns have been 2.8% over the last ten decades. The average return of the Hang Seng is essentially the annual profit that managed funds make for investors.
Below is a list of the yearly returns, 2011-2020. The past returns are not indicative of future performance. (Source: Macrotrends)
Hang Seng Index markets hours
The Hang Seng 50 opens from 9:30am to 4:00pm local time on weekdays. Lunch is at 12pm.
Continue reading for more information on stock exchange hours.
How to trade Hang Seng Index
There are many options for trading the Hang Seng Index. Each of these instruments allows you to gain exposure to all 50 businesses from one position.
Hang Seng Index FFDs
Contracts to differ (CFDs), derivatives that derive the price of an underlying market, such as the Hang Seng Index in this case, are called contracts for difference. While you won’t actually own an asset, speculation can be made about its value.
Learn more about CFDs.
Hang Seng Index futures
Futures contracts enable you to exchange an asset for a fixed price at a particular expiry. Hang Seng contract are not like other futures. A Hang Seng index is just a number that refers to a group of stocks.
Hang Seng Index options
Hang Seng options can be contracts that grant you the right but not the obligation to buy or trade the index at a particular price on a date.
CFDs will be available for trade when the Hang Seng Index becomes available to us via options.
Hang Seng Index stocks. ETFs
ETFs can be used to trade the Hang Seng Index. These are investment instruments which hold a certain number of stocks.
Or, you can trade stocks on Hang Seng Index individually. This allows you to focus your attention on certain areas.
Find out more about stock trading with us.
How to shorten Hang Seng Index
To shorten the Hang Seng Index, you must assume that the index will fall. This can either be done by shorting the Hang Seng contract, or by shorting its constituent stocks. If a Hang Seng Exchange Tradeable Fund is available, traders could be interested in selling short. If Hang Seng stocks seem overvalued you might consider buying put options. Or you could buy a Hang Seng Option.
Continue reading about shorting a market.
Can you invest in Hang Seng Index UK funds?
You can trade derivatives or invest in the Hang Seng Index directly in the UK.
