Hang Seng Index


Hang Seng Index

The Hang Seng Index (abbreviated: HSI, zh-t|linktext|恒|生|指|數) 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".

tatistics

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 thru 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.

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 43 HSI constituent stocks in total. As of June 10, 2008, they are:

Hang Seng Finance Sub-index
*0005 HSBC Holdings plc
*0011 Hang Seng Bank Ltd
*0023 Bank of East Asia, Ltd
*0388 HKEx Limited
*0939 China Construction Bank
*1398 Industrial and Commercial Bank of China
*2318 Ping An Insurance
*2388 BOC Hong Kong (Holdings) Ltd
*2628 China Life
*3328 Bank of Communications Ltd
*3988 Bank of China LtdHang Seng Utilities Sub-index
*0002 CLP Holdings Ltd
*0003 Hong Kong and China Gas Company Limited
*0006 Hong Kong Electric Holdings LtdHang Seng Properties Sub-index
*0001 Cheung Kong (Holdings) Ltd
*0012 Henderson Land Development Co. Ltd
*0016 Sun Hung Kai Properties Ltd
*0083 Sino Land Co Ltd
*0101 Hang Lung Properties Ltd
*0688 China Overseas Land & Investment LimitedHang Seng Commerce & Industry Sub-index
*0004 Wharf (Holdings) Ltd
*0013 Hutchison Whampoa Ltd
*0017 New World Development Co. Ltd.
*0019 Swire Pacific Ltd 'A'
*0066 MTR Corporation Ltd
*0144 China Merchants Holdings (International) Co Ltd
*0267 CITIC Pacific Ltd
*0291 China Resources Enterprise, Ltd
*0293 Cathay Pacific Airways Ltd
*0330 Esprit Holdings Ltd
*0386 Sinopec Corp
*0494 Li & Fung Ltd
*0551 Yue Yuen Industrial (Holdings) Ltd
*0700 Tencent Holdings Limited "(effective June 10, 2008)"cite press release |url=http://main.hsi.com.hk/hsicom/announce/20080509e.pdf |title=Hang Seng Indexes Announces Index Review Results |publisher=Hang Seng Indexes |format=PDF |date=2008-05-09 |accessdate=2008-05-09 ]
*0762 China Unicom Ltd
*0857 PetroChina Company Limited
*0883 CNOOC Ltd
*0906 China Netcom Group Corporation Ltd
*0941 China Mobile Ltd
*1088 China Shenhua Energy Company Limited
*1199 COSCO Pacific Ltd
*2038 Foxconn International Holdings Ltd
*2600 Aluminum Corporation of China Limited (Chalco) "(effective June 10, 2008)"

"Removed, effective June 10, 2008:"
* 0008 PCCW
* 1038 Cheung Kong Infrastructure Holdings Ltd (CKI Holdings)

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 (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. 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 (能源業)
* Materials (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 examples the annual reports and company announcements.

election 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:"

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:

extrm{Current~Index}= frac{sum extrm{ [} extrm{P(t)} imes extrm{IS} imes extrm{FAF} imes extrm{CF} extrm{] {sum extrm{ [} extrm{P(t-1)} imes extrm{IS} imes extrm{FAF} imes extrm{CF} extrm{] imes extrm{Yesterday's~Closing~Index}.

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

*Hang Seng China AH Index Series (恒生AH指數系列)
*Hang Seng China Enterprises Index (恒生中國企業指數)
*Hang Seng China H-Financials Index (恒生中國H股金融行業指數)
*Hang Seng Composite Index Series (恒生綜合指數系列)
*Hang Seng Freefloat Index Series (恒指流通指數系列)
*Hang Seng Total Return Index Series (恒生股息累計指數系列)
*Hang Seng Composite Industry Indexes (恒生綜合行業指數)

References

External links

* [http://www.hsi.com.hk/ Hang Seng Indexes Company Limited (formerly HSI Services Ltd.)] - Company website
* [http://main.hsi.com.hk/hsicom/constituent/con_hsi.xls Constituent stocks of the HSI] - Link to the websites of constituent companies of HSI
* [http://main.hsi.com.hk/hsicom/constituent/hist_hsi.xls Changes in the constituent stocks of the HSI]
* [http://www.hkex.com.hk HKEx] - Hong Kong Exchanges and Clearing Limited (HKEx)
* [http://www.info.gov.hk/hkma/ HKMA] - Hong Kong Monetary Authority
* [http://www.info.gov.hk/fsb/ FSB] - Financial Services Bureau
* [http://www.quamnet.com/marketslist.action?showIndice=HSI Hang Seng Index Constituents - delayed quotes] - List and quote for constituents of Hang Seng Index
* [http://www.quamnet.com Information and quotes on companies listed in Hong Kong] - Hong Kong company information and stock quotes
* [http://finance.yahoo.com/q?s=%5EHSI&d=t Quotes of Hang Seng Index] - Quotes of Hang Seng Index
* [http://hkstock.selfip.com/ Realtime HK stock quotes] - Realtime HK stock quotes
* [http://www.taprofessional.de/charts/Hang-Seng-Index-Point-and-Figure-Chart.htm Hongkong: Hang Seng Index] - Hongkong: Hang Seng Index


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