HKI index

Hang Seng Index

The Hang Seng Index (HSI), also known as Heng Seng Index, is a free-float market capitalization-weighted index of the largest companies in Hong Kong. The index was introduced on 24 November 1969, and is currently compiled and maintained by Hang Seng Indexes Company Limited. It is used to record and monitor daily changes of the largest companies of the Hong Kong stock market, and is the main indicator of the overall market performance in Hong Kong.

Hang Seng index is composed of the following stocks: HSBC, Hang Seng Bank, China Mobile, China Construction Bank, Bank of China, Hutchison, China Life Insurance, CKH, Petrochina, and Tencent. The weights of these stocks are adjusted quarterly and total market capitalization is calculated with the closing prices at the end of the month of the previous quarter. The stocks used in the Hang Seng Index are also components of Hang Seng China Enterprises Index which includes some of the largest and most traded mainland Chinese companies listed in Hong Kong.

Hang Seng Index is a price index which is not adjusted for dividend payments and hence does not reflect the total return for investment in the index. Because of this, Hang Seng Index does not provide investors with the same amount of return as a comparable equity index. Nevertheless, due to its wide coverage, Hang Seng Index is still widely used as an indicator of market sentiment.

Hang Seng Index experienced its peak in October 2007, where it attained a level of 31,638 points. However, due to the global financial crisis in 2009, the index plummeted to its lowest level of 17,710 points in March 2009. This drastic decrease was partially attributed to the Chinese equity market, which caused fear of the economic slowdown of China due to the tightening of credit lines and increasing deflationary pressures. Despite the rapid fall in 2009, Hang Seng Index recovered substantially and closed at 29,947 points at the end of 2010.

In recent years, Hang Seng Index has steadily increased and reached its historical high of 33,484 points in June 2015. This rise can be attributed to the better performance of the Chinese economy and the positive effect of the China A-share inclusion in the MSCI Emerging Markets Index. Hang Seng Index continued to rise until June 2018, when it reached 33,153 points. Nonetheless, its momentum weakened due to the US-China trade war and uncertainties in the global macro-economic environment.

Moreover, Hang Seng Index also faces the challenge of regulatory policies. Since late 2019, the U.S. has imposed sanctions on major Chinese companies, which has increased the risks of investment in those domestic enterprises that are components of the HSI. Furthermore, the Hong Kong government has recently proposed national security regulation to proactively quell Hong Kong’s political chaos, which could further damage the relationship of the U.S. and China and affect the Hong Kong stock market.

Although Hang Seng Index is currently facing uncertain environment, it is expected that the index will rise in the short term, as company earnings and market sentiment will likely be supported by a strong domestic economy. Furthermore, the potential recovery of the Hong Kong political situation and the expected trade deal between the U.S. and China will also alleviate market sentiment in the longer term. In order to gain most out of this situation, investors can use Hang Seng Index as a guide to single out potential investments in the Hong Kong market.

The Hang Seng Index (HISI) is a stock market index in Hong Kong. It is the most widely utilized indicator of the overall performance of the Hong Kong stock market and it is one of the major stock market indices in Asia.

The index was created in 1969, and is compiled and maintained by Hang Seng Bank Ltd, a subsidiary of HSBC Bank (Hong Kong). As of August 13, 2019, the Hang Seng Index stands at 28,962.77 points. The index comprises the top blue-chip companies listed on the Hong Kong Stock Exchange based on market capitalization.

Since its inception, the Hang Seng Index has been one of the most important yardsticks used by investors to measure the performance of the Hong Kong stock market and gauge the investors’ sentiment regarding Hong Kong. The benchmark index is often used as a proxy for the performance of the Chinese economy, as it is likely to be one of the first and most sensitive indicators of changes in Chinese equities.

A rise or fall of the Hang Seng Index usually has a ripple effect on other stock indices in Asia, and is watched closely by many investors around the world. Its movements are presided over by the Hang Seng Index Committee, which convenes bimonthly to review and adjust the stocks in the index according to predetermined criteria.

In terms of technicals, the Hang Seng Index is accountable for quarterly adjustments of the base index, allowing for subtle changes in the index in order to reflect the changing economic realities. The Hang Seng Index also accounts for stock splits and dividends, so that the investor will not be adversely impacted by corporate change such as these.

Undeniably, the Hang Seng Index is one of the most important financial indices in the world and continues to play an invaluable role in the fluctuations of the Hong Kong, and the broader Asian stock markets.