Hong Kong’s Hang Seng – A Brief

Hong Kong’s Hang Seng – A Brief

hang seng

Market performance is crucial to business and the economy’s survival. Any country’s nationals would first consider this as an input for their future moves. Every country lists its stock indexes but, some of them are crucial for the entire world. One such stock index is Hong Kong’s HSI. So, here is a peek into one booming stock index, Hong Kong’s Hang Seng

Hong Kong’s Market Scenario: 

A stock index, or precisely the stock market, is a measure of the stock market and its subsets. Investors can delineate the difference between the present and past prices of something to analyze the market performance in general. The index is a computation of selected stocks providing relevant data to the investors. 

Hang Seng Index (HSI) is a capitalization-weighted index in Hong Kong. The cap-weighted index is when the components’ weight comes from the total market value considering the outstanding shares. Here, an individual stock’s price change and the company’s overall market value have a proportional impact on the stock index. 

Hang Seng Index: 

HSI or Hong Kong’s Hang Seng considers the largest investor in Hong Kong. It records and monitors the regular changes of these companies. Hang Seng is the crucial implication of this region’s overall market performance. It is often considered the market benchmark by most investors in Hong Kong. 

HSI debuted back in the 1960s and is currently maintained by the subsidiary of the Hang Seng Bank. This index covers almost 65-percent of Hong Kong’s market capitalization. You can also find the listings of some Chinese companies, apart from Hong Kong investors, due to the latter’s special administration.

HSI Components and Calculation: 

HSI is a freely-floating index with a 2-second calculation and dissemination interval. It happens during the Hong Kong stock exchange trading hours. HSI value is exclusive of warrant bonuses or cash dividends’ adjustments. Any company would find its listing on the HSI after extensive analysis and external consultations. A company should abide by the following rules to be among HSI constituent stocks.

  1. The company should be among those contributing 90-percent of the entire market value of all normal shares.
  2. The company should also be among those comprising the top 90-percent of the Stock Exchange of Hong Kong’s (SEHK) total turnover.
  3. The company should have a listing for a minimum of 24 months.

If a company doesn’t fulfill the last requirement, it can comply with the regulations based on its average MV rank at the time of its review.

HSI’s current index value is a combination of the previous day’s index combined with the following parameters:

  • Current price of the day
  • The closing price of the previous day
  • Issued shares
  • Cap Factor and
  • Free-float-adjusted factor

Sub-indexes of HSI: 

Every member of the Hang Seng falls into one of the four categories of commerce and industry, properties, utilities, and finance. You’ll find a capping of 10-percent to avoid any single stock from controlling the entire index. There is a quarterly committee convenance to evaluate every component of this index. The company adds new companies or removes existing ones after the scrutiny.