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The Hang Seng Index (HSI) is the primary index used to measure the strength of the Hong Kong economy. It tracks the fluctuations in the stock prices of the 50 largest companies (by market capitalisation) listed on the Hong Kong Stock Exchange. The HSI is owned by Hang Seng Bank, one of Hong Kong’s largest banking institutions.
On this page you’ll find a quick summary of the HSI’s history, a breakdown of how the stocks tracked by the index are selected, and information as to how you can invest in the index.
The HSI was launched on 24th November 1969, after it had been conceived by then-chairman of Hang Seng Bank, Ho Sin Hang. His aim was to create an index in Hong Kong similar to the USA’s famous Dow Jones index. Whereas the Dow Jones follows the performance of 30 stocks listed on stock exchanges across America, the HSI has a larger pool of 50 stocks, and these are all traded on the Hong Kong Stock Exchange.
To date, the HSI’s all time high came on 26th January 2018 when the index hit 33,223.58. This was the culmination of a recovery after the index had entered a bear market in 2015, and then fallen further after the UK’s vote to leave the EU in June 2016 caused the HSI to fall by more than 1000 points.
Since January 2018, the HSI has seen a gradual decline, and like other indices across the world was hit hard by the financial uncertainty caused by the coronavirus pandemic in 2020.
The Hang Seng Index is a free-float adjusted capitalisation-weighted index that tracks the performance of the top 50 companies listed on the Hong Kong Stock Exchange.
In order to help categorise the index, four sub-indices were devised in 1985: the Hang Seng Finance Sub-index, Hang Seng Utilities Sub-index, Hang Seng Properties Sub-index, and Hang Seng Commerce & Industry Sub-index. Of these sub-indices, ‘Commerce & Industry’ contains the majority of the companies listed on the HSI.
The need for these four categories gives an indication of the variety of stocks measured by the index, and some of the largest companies tracked by the HSI include HSBC Holdings plc, Hong Kong and China Gas Company Limited, and Henderson Land Development Company Limited.
When it comes to investing in indices such as the HSI, the most straightforward option is to use an ETF (exchange-traded fund). These products are similar to mutual funds in that they allow investors to diversify their investments across all the stocks tracked by a given index (in this case, the HSI), but different in the fact that they can be freely traded on an exchange at any time – something not possible with mutual funds.