Hong Kong Hang Seng Index (HSI)

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The Hang Seng Index (abbreviated: HSI) is a capitalization-weighted stock market index in the Hong Kong Stock Exchange. It is used to record and monitor daily changes of the largest companies of the Hong Kong stock market and as the main indicator of the overall market performance in Hong Kong. These 39 companies represent about 65% of capitalization of the Hong Kong Stock Exchange.

HSI was started on November 24, 1969, compiled and maintained by HSI Services Limited, which is a wholly owned subsidiary of Hang Seng Bank, the second largest bank 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 Composite Index, Hang Seng HK MidCap Index, etc.

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 6, 1993 and, 13 years later, passed the 20,000 point milestone on December 28, 2006. Its all-time highs, set on July 24, 2007, are 23,534.38 points in trading and 23,472.88 points at the close.

On January 2, 1985, four subindices were established in order to make the index clearer and to classify constituent stocks into four distinct sectors. There are totally 40 Hang Seng Index Constituent Stocks since 13 September 2007 and they are namely:

Hang Seng Finance 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 Ltd

Hang Seng Utilities Index

* 0002 CLP Holdings Ltd
* 0003 Hong Kong and China Gas Company Limited
* 0006 Hong Kong Electric Holdings Ltd

Hang Seng Property 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

Hang Seng Commercial & Industrial Index

* 0004 Wharf (Holdings) Ltd
* 0008 PCCW 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
* 0762 China Unicom Ltd
* 0883 CNOOC Ltd
* 0906 China Netcom Group Corporation (Hong Kong) Ltd
* 0941 China Mobile (Hong Kong) Ltd
* 1038 Cheung Kong Infrastructure Holdings Ltd
* 1199 COSCO Pacific Ltd
* 2038 Foxconn International Holdings Ltd

In the future, the number of constituent stocks will be increased to 50 in order to reflect the performance of Hong Kong stock market more accurately.

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 regarding the management of HSI. The Committee keeps reviewing the constituent stocks of HSI. Usual changes are expected.

Another new HSI Services approved stock market index is the FTSE/Xinhua China 25 Index (a joint venture between the FTSE Group and Xinhua Finance) which was launched on October 25, 2004, targeting Chinese red chip (listed in Hong Kong but with Chinese controlling shareholders) companies.

The Hang Seng Stock Classification System

The 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 the FTSE Global Classification System, which is compiled and administered by FTSE International Limited.

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:

* Oil & Resources (資源礦產業)
* Industrial Goods (工業製品業)
* Consumer Goods (消費品製造業)
* Services (服務業)
* 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.
http://en.wikipedia.org/wiki/Hang_Seng_Index