The Hang Seng is a market capitalization weighted index, representing the 50 largest companies on the Hong Kong Stock Exchange. The HSI is largely composed of companies in the finance industry and is an important indicator of the performance of the Hong Kong stock market and the Chinese economy.
Hang Seng Index Overview
The Hang Seng Index was designed to serve as the Dow Jones for companies in Hong Kong, and true enough, the index has managed to meet its original purpose to this day.
In fact, the Hang Seng index covers more than 60% of the total market cap of the Hong Kong stock exchange and is the most watched stock index in Asia.
Some of the largest companies monitored by the index include HSBC, Tencent Holdings and the Bank of China.
Factors affecting the Hang Seng Index price
Aside from the fundamental and other economic indicators that may affect the direction of the market, it’s important to note that any developments regarding the Chinese yuan will likely influence the value of the index. This is due to the large number of Chinese stocks tracked by the index itself.
Trading the Hang Seng Index
Similar to other notable indices, the Hang Seng is a highly desirable asset in financial trading as it provides access to valuable companies in Asia. The high liquidity and large intraday fluctuations are also attractive factors for traders, and especially those who are interested in long-term trading.
Did you know?
While the Hang Seng is a market capitalization index, there is a 10% cap for each stock in order to avoid over-representation of individual stocks. As such, a single stock’s positive or negative performance won’t have a pronounced effect on the index as a whole.