Hang Seng Index

Financial Dictionary -> Investing -> Hang Seng Index

Started in 1964, the Hang Seng Index (abbreviated to simply HSI) is the leading index that tracks the Hong Kong Stock Exchange. Similar to the Dow Jones in the United States, the Hang Seng takes a certain number of companies (in this case 45) and ranks them on an index, based on their capitalization. Like other major stock market indexes the Hang Seng is an important indicator as to how well the entire Hong Kong market and economy is doing, thus it is extensively quoted and used by market analysts in forecasts. It aims to accurately represent the whole stock exchange by utilizing an industry classification system. Various figures are calculated daily and presented on the daily bulletin for investors and analysts.

Because of the ties between Honk Kong and its country China, many outside Chinese companies are also on the Hong Kong stock exchange and included in the Hang Seng Index, despite there being other large Asian exchanges.

The selection process is an extensive system of analysis and debate, but generally speaking for companies to have their stock listed they must be within the top 90% of companies based on the total market value of their ordinary shares, and the top 90% in terms of total turnover, as well as having to be validly listed on the Honk Kong Stock Exchange for 24 months to prove that their position is stable.
Stocks are divided in to several sectors and industries for accuracy and clarity. The sectors are Finance, Utilities, Properties and Commerce, with a more in depth list of specific industries, including Energy, Materials, Industrial Goods, Consumer Goods, Services, Telecommunications, Utilities, Financials, Properties & Construction, Information Technology, and conglomerates.

According to statistics the Hang Seng Index accounts for 65 to 70 percent of the market's total capitalization.
Companies listed on the Hang Seng include HSBC Holdings, Foxconn International, Esprit Holdings, and Henderson Land Development.