|
|
|
|
Hang Seng Index
|
| |
|
| |
The Hang Seng Index (abbreviated: HSI, ) 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 45 companies represent about 67% of capitalization of the Hong Kong Stock Exchange.
HSI was started on November 24, 1969, and is currently compiled and maintained by HSI Services Limited, which is a wholly owned subsidiary of Hang Seng Bank, the largest bank registered and listed in Hong Kong in terms of market capitalisation.
Discussion
Ask a question about 'Hang Seng Index' Start a new discussion about 'Hang Seng Index' Answer questions from other users |
Encyclopedia
The Hang Seng Index (abbreviated: HSI, ) 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 45 companies represent about 67% of capitalization of the Hong Kong Stock Exchange.
HSI was started on November 24, 1969, and is currently compiled and maintained by HSI Services Limited, which is a wholly owned subsidiary of Hang Seng Bank, the largest bank 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 AH Index Series, Hang Seng China Enterprises Index, Hang Seng China H-Financials Index, Hang Seng Composite Index Series, Hang Seng Freefloat Index Series and Hang Seng Total Return Index Series.
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 fell to 10,676 points, having fallen nearly two-thirds from its all-time peak.
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 42 HSI constituent stocks in total. As of October 14, 2008, (after the merge of China Unicom and China Netcom), they are:
Hang Seng Finance Sub-index
Hang Seng Utilities Sub-index
Hang Seng Properties Sub-index
Hang Seng Commerce & Industry Sub-index
In the future, the number of constituent stocks will be increased to 50 in order to reflect the changes in the Hong Kong stock market and to maintain the index as the most representative market benchmark.
The Hang Seng Composite Index Series was launched on October 3, 2001, targeting on providing a broad standard of the performance of the Hong Kong stock market. Comprising the top 200 listed companies in terms of market capitalisation, it is composed of the geographical series and the industry series. The market capitalization of these companies accounts for about 97% of the total capitalization of the stocks in Hong Kong. To ensure fairness in its activities, the HSI Services established the Independent Advisory Committee to give advice on issues pertaining to the indexes. The Committee keeps reviewing the constituent stocks of HSI on a quarterly basis. Usual changes are expected.
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 HSI Services 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 systems.
General classification guidelines:
i) The sales revenue arising from each business area of a company is the primary parameter of stock classification, and the net profit will also be taken into consideration to determine whether that company's business runs well.
ii) A company will be classified into different sectors according to its majority source of sales revenue.
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
- Materials
- Industrial Goods
- Consumer Goods
- Services
- Telecommunications
- Utilities
- Financials
- Properties & Construction
- Information Technology
- Conglomerates
Source of information
The classification of each stock is based on the information available to the public, for examples 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";
- 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:
| Average MV Rank at Time of Review | Minimum Listing History |
|---|
| Top 5 | 3 Months | | 6-15 | 3 Months | | 16-20 | 12 Months | | 21-25 | 18 Months | | Below 25 | 24 Months |
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
- FAF:Freefloat-adjusted Factor, which is between 0 and 1, adjusted every six months
- CF:Cap Factor, which is between 0 and 1, adjusted every six months
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 70% of the total market value. This coverage ratio is a positive sign when compared with major overseas stock indices.
Other related Hang Seng stock indexes
External links
- - Company website
- - Link to the websites of constituent companies of HSI
- - Hong Kong Exchanges and Clearing Limited (HKEx)
- - Hong Kong Monetary Authority
- - Financial Services Bureau
- - List and quote for constituents of Hang Seng Index
- - Hong Kong company information and stock quotes
- - Quotes of Hang Seng Index
- - Realtime HK stock quotes
- - Hongkong: Hang Seng Index
|
| |
|
|
