The Hang Seng Index (HSI) is a market-capitalization-weightedstock market index in Hong Kong, adjusted for free float. It tracks and records daily changes in the largest companies listed on the Hong Kong Stock Exchange and serves as the primary indicator of overall market performance in Hong Kong. These 82 constituent companies represent about 58% of the capitalisation of the Hong Kong Stock Exchange.[2]
Ho Sin Hang, chairman of the Hang Seng Bank, conceived the idea of creating the Hang Seng Index as a "Dow Jones Index for Hong Kong".[4][5] Along with Hang Seng Director Lee Quo-wei, he commissioned Hang Seng's head of Research Stanley Kwan to create the index in 1964,[4] the index was initially used for internal reference in the Hang Seng Bank, they debuted the index on November 24, 1969.[5]
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 January 26, 2018, was 33,223.58 points[6] 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 further fell to 10,676.29 points, having fallen nearly two-thirds from its all-time peak, but passed the 20,000 point milestone again to 20,063.93 on 24 July 2009. The index reached 25,000.00 on August 19, 2014, reaching as high as 25,201.21 that day, later closing at 24,909.26 points. It continued rising to hit 26,000 on April 8, 2015, with a close of 26,236.86 The following day, it rose to as much as 27,922.67 before closing at 26,944.39. Yet again, another milestone was reached on April 13, 2015, rising to over 28,000 points, or closing to 28,016.34, the highest since December 2007. On July 8, 2015, the index fell as much as 2139 points. On 21 August the index entered a bear market.
The index at that point hovered around 18000-19000 points,[7] until it ended in February 2016. On 24 June 2016, the market fell 1,000 points in response to UK EU referendum results that "Leave" won the vote against "Remain". Then, the markets continuously fell on 27 and 28 June 2016 before recovered slightly on 29 June 2016.
Contract Specification
The Hang Seng Index is traded as a future on the Hong Kong Futures Exchange (HKFE). The full contract specifications are below:
The following table shows the annual development of the Hang Seng Index, which was calculated from 1964.[9][10]
Year
Closing level
Change in Index in Points
Change in Index in %
1965
82.14
1966
79.69
−2.45
−2.98
1967
66.92
−12.77
−16.02
1968
107.55
40.63
60.71
1969
155.47
47.92
44.56
1970
211.64
56.17
36.13
1971
341.36
129.72
61.29
1972
843.40
502.04
147.07
1973
433.68
−409.72
−48.58
1974
171.11
−262.57
−60.54
1975
350.00
178.89
104.55
1976
447.67
97.67
27.91
1977
404.02
−43.65
−9.75
1978
495.51
91.49
22.64
1979
879.38
383.87
77.47
1980
1,473.59
594.21
67.57
1981
1,405.82
−67.77
−4.60
1982
783.82
−622.00
−44.24
1983
874.94
91.12
11.63
1984
1,200.38
567.35
89.62
1985
1,752.45
552.07
45.99
1986
2,568.30
815.85
46.55
1987
2,302.75
−265.55
−10.34
1988
2,687.44
384.69
16.70
1989
2,836.57
149.13
5.55
1990
3,024.55
187.98
6.63
1991
4,297.33
1,272.78
42.08
1992
5,512.39
1,215.06
28.28
1993
11,888.39
6,376.00
115.67
1994
8,191.04
−3,697.40
−31.10
1995
10,073.39
1,882.35
22.98
1996
13,451.45
3,378.06
33.53
1997
10,722.76
−2,728.69
−20.29
1998
10,048.58
−674.18
−6.29
1999
16,962.10
6,913.52
68.80
2000
15,095.53
−1,866.57
−11.00
2001
11,397.21
−3,698.32
−24.50
2002
9,321.29
−2,075.92
−18.21
2003
12,575.94
3,254.65
34.92
2004
14,230.14
1,654.20
13.15
2005
14,876.43
646.29
4.54
2006
19,964.72
5,088.29
34.20
2007
27,812.65
7,847.93
39.31
2008
14,387.48
−13,425.17
−48.27
2009
21,872.50
7,485.02
52.02
2010
23,035.45
1,162.95
5.32
2011
18,434.39
−4,601.06
−19.97
2012
22,656.92
4,222.53
22.91
2013
23,306.39
649.47
2.87
2014
23,605.04
298.65
1.28
2015
21,914.40
−1,690.64
−7.16
2016
22,000.56
86.16
0.39
2017
29,919.15
7,918.59
35.99
2018
25,845.70
−4,073.45
−13.61
2019
28,189.75
2,344.05
9.07
2020
27,231.13
−958.62
−3.40
2021
23,397.67
−3833.46
−14.08
2022
19,781.41
−3,616.26
−15.46
2023
17,047.39
−2,734.02
−13.82
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 82 HSI constituent stocks in total. As of February 2024 they are:[11]
The Hang Seng Composite Index Series (恒生綜合指數) was launched on October 3, 2001, targeting on providing a broad standard of the performance of the Hong Kong stock market. It was last revamped on March 8, 2010, and comprises 307 constituents (will become 306 from August 9, 2010[citation needed]). The market capitalisation of these companies accounts for about 95% of the total capitalisation of the stocks in Hong Kong.
To ensure the impartiality of its operation, Hang Seng Indexes Company Limited established an Independent Advisory Committee to give advice on issues pertaining to the indexes, including constituent changes and the development of new indexes.
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 Hang Seng Indexes Company 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
General classification guidelines:
i) The sales revenue arising from each business area of a company is the primary parameter of stock classification. Profit or assets will also be taken into consideration where these better reflects the company's business.
ii) A company will be classified into different sectors according to its majority source of sales revenue(or profit or assets if relevant).
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 (能源業)
Material (源材料業)
Industrial Goods (工業製品業)
Consumer Goods (消費品製造業)
Services (服務業)
Telecommunications (電訊業)
Utilities (公共事業)
Financials (金融業)
Properties & Construction (地產建築業)
Information Technology (資訊科技業)
Conglomerates (綜合企業)
Source of information
The classification of each stock is based on the information available to the public, for example 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" (香港交易所);
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
6 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 (Only H-share portion is taken into calculation in case of H-share constituents.)
FAF: Freefloat-adjusted Factor, which is between 0 and 1, adjusted quarterly
CF: Cap Factor, which is between 0 and 1, adjusted quarterly
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 60% of the total market value. This coverage ratio compares favorably with major overseas stock indices.
![{\displaystyle {\textrm {Current~Index}}={\frac {\sum {\textrm {[}}{\textrm {P(t)}}\times {\textrm {IS}}\times {\textrm {FAF}}\times {\textrm {CF}}{\textrm {]}}}{\sum {\textrm {[}}{\textrm {P(t-1)}}\times {\textrm {IS}}\times {\textrm {FAF}}\times {\textrm {CF}}{\textrm {]}}}}\times {\textrm {Yesterday's~Closing~Index}}.}](https://wikimedia.org/api/rest_v1/media/math/render/svg/1ff318e0832a22434e2a950ae3561dae8b3ac2c4)
