The Hang Seng Index (abbreviated: HSI, Chinese: æ'ç"ŸæŒ‡æ•¸) is a freefloat-adjusted market capitalization-weighted stock market index in Hong Kong. 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. These 50 constituent companies represent about 58% of the capitalisation of the Hong Kong Stock Exchange.
HSI was started on November 24, 1969, and is currently compiled and maintained by Hang Seng Indexes Company Limited, which is a wholly owned subsidiary of Hang Seng Bank, one of the largest banks registered and listed in Hong Kong in terms of market capitalisation. It is responsible for compiling, publishing and managing the Hang Seng Index and a range of other stock indexes, such as 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. Hang Seng in turn, despite being a public company, is held in majority by British financial firm HSBC.
History
Ho Sin Hang, chairman of the Hang Seng Bank, conceived the idea of creating the Hang Seng Index as a "Dow Jones Index for Hong Kong". Along with Hang Seng Director Lee Quo-wei, he commissioned Hang Seng's head of Research Stanley Kwan to create the index, which debuted on November 24, 1969.
Statistics
When the Hang Seng Index was first published, its base of 100 points was set equivalent to the stocks' total value as of the market close on July 31, 1964. Its all-time low is 58.61 points, reached retroactively on August 31, 1967, after the base value was established but before the publication of the index. The Hang Seng passed the 10,000 point milestone for the first time in its history on December 10, 1993 and, 13 years later, passed the 20,000 point milestone on December 28, 2006. In less than 10 months, it passed the 30,000 point milestone on October 18, 2007. Its all-time high, set on October 30, 2007, was 31,958.41 points during trading and 31,638.22 points at closing. From October 30, 2007 through March 9, 2008, the index lost 9,426 points or approximately 30%. On September 5, it fell past the 20,000 mark the first time in almost a year to a low of 19,708.39, later closing at 19,933.28. On October 8, 2008, the index closed at 15,431.73, over 50% less than the all-time high and the lowest closing value in over two years. On October 27, 2008, the index further fell to 10,676.29 points, having fallen nearly two-thirds from its all-time peak, but passed the 20,000 point milestone again to 20,063.93 on 24 July 2009. The index reached 25,000.00 on August 19, 2014, reaching as high as 25,201.21 that day, later closing at 24,909.26 points. It continued rising to hit 26,000 on April 8, 2015 with a close of 26,236.86 The following day, it rose to as much as 27,922.67 before closing at 26,944.39. Yet again, another milestone was reached on April 13, 2015 rising to over 28,000 points, or closing to 28,016.34, the highest since December 2007. On July 8, 2015, the index fell as much as 2139 points. On 21 August the index entered a bear market. The index is hovering around 18000-19000 points. In 24 June 2016, the market fell 1,000 points in respond to UK EU referendum results that "Leave" won the vote against "Remain". Then, the markets continuously fell on 27 and 28 June 2016 before recovered sightly on 29 June 2016.
Components
On January 2, 1985, four sub-indices were established in order to make the index clearer and to classify constituent stocks into four distinct sectors. There are 50 HSI constituent stocks in total. As of February 13, 2017 they are:
Hang Seng Finance Sub-index
- 0939 China Construction Bank
- 0005 HSBC Holdings plc
- 1299 AIA Group Limited
- 1398 Industrial and Commercial Bank of China
- 2388 BOC Hong Kong (Holdings) Ltd
- 2318 Ping An Insurance
- 3988 Bank of China Ltd
- 3328 Bank of Communications Ltd
- 0011 Hang Seng Bank Ltd
- 2628 China Life
- 0388 HKEx Limited
- 0023 Bank of East Asia, Ltd
Hang Seng Utilities Sub-index
- 0002 CLP Holdings Limited
- 0003 Hong Kong and China Gas Company Limited
- 0006 Power Assets Holdings Limited
- 0836 China Resources Power
- 1038 Cheung Kong Infrastructure Holdings Limited
Hang Seng Properties Sub-index
- 0016 Sun Hung Kai Properties Limited
- 1113 CK Property Holdings Limited
- 0688 China Overseas Land & Investment Limited
- 0004 Wharf (Holdings) Limited
- 0012 Henderson Land Development Company Limited
- 1109 China Resources Land Limited
- 0101 Hang Lung Properties Limited
- 0017 New World Development Company Limited
- 0083 Sino Land Company Limited
- 0823 The Link REIT
Hang Seng Commerce & Industry Sub-index
- 0941 China Mobile Ltd
- 0700 Tencent Holdings Limited
- 0883 CNOOC Ltd
- 0001 CK Hutchison Holdings Limited
- 0267 CITIC Pacific Ltd
- 1928 Sands China
- 0762 China Unicom Ltd
- 0027 Galaxy Entertainment Group Ltd.
- 0066 MTR Corporation Ltd
- 0857 PetroChina Company Limited
- 0386 Sinopec Corp
- 0151 Want Want China Holdings Ltd
- 0992 Lenovo Group
- 0322 Tingyi (Cayman Islands) Holding Corp
- 1044 Hengan International Group Co. Ltd
- 0019 Swire Group
- 1088 China Shenhua Energy
- 1880 Belle International
- 0144 China Merchants Holdings (International)
- 0293 Cathay Pacific Airways Ltd
- 2319 Mengniu Dairy
- 0135 Kunlun Energy
- 0175 Geely Auto
The Hang Seng Composite Index Series (æ'ç"Ÿç¶œåˆæŒ‡æ•¸) was launched on October 3, 2001, targeting on providing a broad standard of the performance of the Hong Kong stock market. It was last revamped on March 8, 2010, and comprises 307 constituents (will become 306 from August 9, 2010). The market capitalisation of these companies accounts for about 95% of the total capitalisation of the stocks in Hong Kong.
To ensure the impartiality of its operation, Hang Seng Indexes Company Limited established an Independent Advisory Committee to give advice on issues pertaining to the indexes, including constituent changes and the development of new indexes.
Hang Seng Industry Classification System
Hang Seng Industry Classification System (formerly called Hang Seng Stock Classification System) is a comprehensive system designed for the Hong Kong stock market by Hang Seng Indexes Company Limited. It reflects the stock performance in different sectors. It caters for the unique characteristics of the Hong Kong stock market and maintains the international compatibility with a mapping to international industry classification
General classification guidelines:
i) The sales revenue arising from each business area of a company is the primary parameter of stock classification. Profit or assets will also be taken into consideration where these better reflects the company's business.
ii) A company will be classified into different sectors according to its majority source of sales revenue(or profit or assets if relevant).
iii) Re-classification of a stock's Industry Sector will occur once the company's business has undergone a major change, such as, substantial merger or acquisition.
Industry sectors:
- Energy (能æºæ¥)
- Material (æºææ–™æ¥)
- Industrial Goods (å·¥æ¥è£½å"æ¥)
- Consumer Goods (消費å"è£½é€ æ¥)
- Services (æœå‹™æ¥)
- Telecommunications (電訊æ¥)
- Utilities (公共事æ¥)
- Financials (é‡'èžæ¥)
- Properties & Construction (地ç"¢å»ºç¯‰æ¥)
- Information Technology (資訊ç§'技æ¥)
- Conglomerates (綜åˆä¼æ¥)
Source of information
The classification of each stock is based on the information available to the public, for example the annual reports and company announcements.
Selection criteria for the HSI constituent stocks
HSI constituent stocks are selected with the use of extensive analysis, together with external consultation. To be qualified for selection, a company:
- must be among those that comprise top 90% of the total market value of all ordinary shares;
- must be among those that comprise top 90% of the total turnover on the Stock Exchange of Hong Kong Limited "SEHK" (香港交æ˜"所);
- should have a listing history of 24 months or meet the requirements of the following Guidelines:
Guidelines for Handling Large-cap Stocks Listed for Less than 24 Months
For a newly listed large-cap stock, the minimum listing time required for inclusion in the stock universe for the HSI review is as follows:
Among the eligible candidates, final selections are based on their:
- market capitalisation and turnover rankings;
- representation of the respective sub-sectors within HSI; and
- financial performance.
Calculation formula for HSI
The current Hang Seng Index is calculated from this formula:
Descriptions on parameters:
- P(t)：Current Price at Day t
- P(t-1)：Closing Price at Day (t-1)
- IS：Issued Shares (Only H-share portion is taken into calculation in case of H-share constituents.)
- FAF：Freefloat-adjusted Factor, which is between 0 and 1, adjusted quarterly
- CF：Cap Factor, which is between 0 and 1, adjusted quarterly
Daily reports for HSI
Investors in Asian markets monitor the following reports for investment activities:
- Hang Seng Indexes Daily Bulletin
- Hang Seng Index (HSI) Constituent Stocks Performance
- Index Performance Summary
- Total Return Index Series Daily Bulletin
Representativeness of the HSI
The representativeness of the HSI can be studied by the turnover of the whole stock market and by how much its market capitalisation covers. The aggregate market value of the HSI constituent stocks is maintained at approximately 60% of the total market value. This coverage ratio compares favorably with major overseas stock indices.
- Hang Seng China Enterprises Index (æ'ç"Ÿä¸åœ‹ä¼æ¥æŒ‡æ•¸)
- Hang Seng China-Affiliated Corporations Index (æ'ç"Ÿé¦™æ¸¯ä¸è³‡ä¼æ¥æŒ‡æ•¸)
- Hang Seng China H-Financials Index (æ'ç"Ÿä¸åœ‹Hè‚¡é‡'èžè¡Œæ¥æŒ‡æ•¸)
- Hang Seng Mainland 100 (æ'ç"Ÿä¸åœ‹å…§åœ°100)
- Hang Seng Mainland 25 (æ'ç"Ÿä¸åœ‹å…§åœ°25)
- Hang Seng HK 35 (æ'ç"Ÿé¦™æ¸¯35)
- Hang Seng REIT Index (æ'ç"Ÿæˆ¿åœ°ç"¢åŸºé‡'指數)
- Hang Seng Corporate Sustainability Index Series (æ'ç"Ÿå¯æŒçºŒç™¼å±•ä¼æ¥æŒ‡æ•¸ç³»åˆ—)
- Hang Seng Composite Index (æ'ç"Ÿç¶œåˆæŒ‡æ•¸ç³»åˆ—)
- Hang Seng Composite Industry Indexes (æ'ç"Ÿç¶œåˆè¡Œæ¥æŒ‡æ•¸)
- Hang Seng Composite Size Indexes (æ'ç"Ÿç¶œåˆå¸‚值指數)
- Hang Seng Short & Leveraged Index Series (æ'ç"ŸçŸå€‰åŠæ§"桿指數系列)
- Hang Seng China A Industry Top Index (æ'ç"ŸAè‚¡è¡Œæ¥é¾é 指數)
- Hang Seng China 50 Index (æ'ç"Ÿç¥žå·ž50指數)
- Hang Seng China AH Premium Index(æ'ç"ŸAH股溢價指數)
- Hang Seng China AH Index Series (æ'ç"ŸAH指數系列)
- Hang Seng Total Return Index Series (æ'ç"Ÿè‚¡æ¯ç´¯è¨ˆæŒ‡æ•¸ç³»åˆ—)
- Hang Seng Dividend Point Index Series (è‚¡æ¯é»žæŒ‡æ•¸ç³»åˆ—)
See also
- SSE Composite Index
- SZSE Component Index
- Taiwan Capitalization Weighted Stock Index
References
External links
- Bloomberg page for HSI:IND
- Official website (in English) (in Chinese)
- Reuters page for .HSI
- Historical market capitalizations for companies part of Hang Seng index