The Hang Seng Index (HSI) is the biggest and most important index covering the Hong Kong stock market. It tracks the price changes in the shares of the most valuable companies listed here.
The benchmark created by the Hang Seng index gives intraday trading opportunities. Traders can use instruments like futures, contracts for difference (CFDs), and options to manage exposure to volatility and short-term price movements.
We’ll be looking at everything you need to know about trading the Hong Kong Hang Seng Index, showing how it works and how to get started.
What is the Hang Seng Index and Why It Moves
This index is based on the companies with the highest values of publicly traded (free float) shares. Around 82 stocks are normally included, which means that they make up about 65% of the overall market capitalisation on the Hong Kong stock exchange.
A maximum weight is 8% is applied to individual stocks to avoid any one company having too big an influence. This index was first published in 1969 and is managed by the Hang Seng Indexes Company Limited, which is a subsidiary of Hang Seng Bank.
What is Hang Seng in terms of the industries it represents? This index covers four main sectors, with the biggest being finance. The others are information technology, properties, and utilities.
The stock market here is affected by a combination of local, national, and international economic or political news. This mixture is one of the reasons why it creates interesting intraday ranges for trading purposes.
Hong Kong Hang Seng Index: Composition, Sectors, and Tech Tilt
At the time of writing, the biggest companies in the Hang Sang Index are Alibaba Group, HSBC Holdings, and Tencent Holdings.
The order of the top three tends to vary over time, with China Construction Bank and AIA Group Ltd among the other large companies near the top of the index.
With technology firms playing a big part in the overall market, the dedicated Hang Seng Tech Index is used to provide a sharper focus on the top 30 technology companies in Hong Kong. This can be used by traders who want to take a tech-focused approach.
Why the Hang Seng Index Draws Attention: Volatility and Liquidity Context
As this is a relatively high-volatility stock market, following the Hang Seng Index live can present intraday possibilities. It’s sensitive to events that might not cause as big an impact in other markets, creating opportunities that don’t exist elsewhere.
It’s a highly liquid market at certain times of day, meaning that it offers the chance to trade based on current events by checking out the real-time Hang Seng Index.
Index Hang Seng Trading Hours and Session Overlaps
The Hong Kong stock market is spread over a number of sessions throughout the day.
These session times create an overlap with the main European morning markets. The different sessions listed above in Hong Kong often occur during moments of high-volume trading and breaking headlines.
Trading the Hong Kong Hang Seng Index with ActivTrades
You can trade the Hong Kong Hang Seng Index in several ways. With ActivTrades, you can use CFDs on indices, opening up the possibility of gaining exposure to the market whether it is rising or falling.
Join the ActivTrades site and then choose from the different trading platforms: ActivTrader, TradingView, MetaTrader 4, or MetaTrader 5. You can start trading using the demo option before using real money.
Hang Seng Index Chart, Historical Context, and Real-Time Views
Understanding Hang Seng Index historical data is one of the keys to trading in this market. This knowledge should be combined with a look at real-time charts and the upcoming economic calendar to provide the full context.
The real-time views of Hang Seng Index data show how the market is moving right now, but historical context lets traders see how similar situations have unfolded in the past and may help them decide what to do next.
Hang Seng Index in Context: Comparing Major Indices
When we look at the Hang Seng Index and compare it to other major indices, we can see several factors that make it unique.
- The Hang Seng index has a smaller market cap than the S&P 500, making it more volatile.
- While the market cap is substantially higher than many European indices, its relationship with unique Asian markets and geopolitical tensions can lead to higher volatility.
- It offers a high degree of diversification, with a focus on technology firms that isn’t found in all other indices.
A low level of correlation with indices like the FTSE 1000 and S&P 500 adds diversification potential.
Hang Seng Index FAQs
How Are Stocks Added to or Removed From the Hong Kong Hang Seng Index?
A committee meets every quarter to decide whether any changes should be made to the index’s current list of stocks.
What Index Hang Seng Variations Are Available?
The Hang Seng HK 35 covers the top 35 companies in Hong Kong. The Hang Seng Composite covers around 500 stocks that represent 95% of the overall market cap.
Apart from the Four Main Sectors, What Other Parts of the Economy Are Included in the Hang Seng Index?
Smaller percentages of the Hang Seng stock market index are made up of sectors like healthcare, materials, conglomerates, and consumer staples.
How Many Stocks Are Listed on the Hong Kong Stock Exchange?
The Hang Seng Index covers around 82 stocks, but the overall stock exchange in Hong Kong lists close to 2,600 companies at the time of writing.
Is the Hang Seng Index Based on the Biggest Stock Market in Asia?
The Shanghai and Tokyo stock markets are the largest in Asia, ahead of the Hong Kong equivalent. However, the Hang Seng is particularly popular because it offers a unique composition that increases volatility and intraday trading possibilities.
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.
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