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 highs, set on
October 30, 2007, are 31,958.54 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% of its value wiping out hundreds of billions of investor
wealth. The Hang Seng stock average fell more than 3.5 percent
at at 22,574 on March 13, 2008, in the wake of Wall Street's
retreat from its biggest rally in five years, with regional
investors worried by the continued slide in the United States
dollar and ongoing troubles in the Economy of the United
States.[1] Hong Kong's Hang Seng index plunged as much as
5.4 percent before trimming some losses to trade at 21,304.38,
down 4.2 percent, on March 17, 2008, after JPMorgan Chase
told it would acquire troubled U.S. investment bank Bear
Stearns, signaling to investors the depths of the U. S.-Subprime
mortgage crisis.[2] The Hang Seng index fell 4.4 percent
to 20,896.14 on March 20, 2008 amid mounting worries over
the likely impact of a U.S. recession on China's own booming
economy.[3]
Components
On January
2, 1985, four sub-indexes were established in order to make
the index clearer and to classify constituent stocks into
four distinct sectors. There are totally 43 Hang Seng Index
Constituent Stocks since 10 December 2007 and they are namely:
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.
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" (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 |
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.
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.
External
links
