# Hang Seng Index (HSI): Hong Kong's Stock Market Benchmark Explained

> **Definition**
>
> The Hang Seng Index (HSI) is a market capitalization-weighted index that tracks the performance of the largest and most liquid companies listed on the Hong Kong Stock Exchange.

## What Is the Hang Seng Index (HSI)?

The Hang Seng Index (HSI) is a free-float market capitalization-weighted index that tracks the performance of 82 leading companies across various sectors listed on the Hong Kong Exchange (HKEx).

Established in 1969, it serves as the benchmark equity index for Hong Kong, reflecting the overall health of the local economy and acting as a barometer for Asian markets. The HSI provides insight into the market capitalization and liquidity of one of the world's largest stock exchanges.

### Key Takeaways

*   The Hang Seng Index (HSI) is a free-float market capitalization-weighted index of Hong Kong's largest companies.
*   Launched in 1969, HSI is a key benchmark for the Hong Kong economy and a barometer of Asian markets.
*   As of December 2023, the index comprised 82 stocks across sectors like finance, utilities, and technology.
*   The HSI imposes an 8% cap on individual stock weightings to prevent dominance by any single security.
*   It is managed by Hang Seng Indexes Company Limited, a subsidiary of Hang Seng Bank.

## Insights Into the Hang Seng Index's Market Impact

The HSI is the most cited measure of the Hong Kong economy and serves as a market benchmark for investors.

Launched in 1969, the HSI used a base value of 100 from July 31, 1964. HSI aims to reflect the leadership of the Hong Kong exchange and covers approximately 65% of its total [market capitalization](https://www.investopedia.com/terms/m/marketcapitalization.asp).

As a [special administrative region](https://www.investopedia.com/terms/s/special-administrative-region.asp) of China, Hong Kong has close economic ties with many Chinese companies listed on its exchange.

HSI is owned and managed by Hang Seng Indexes Company Limited, which is a wholly-owned subsidiary of Hang Seng Bank.  

> **Fast Fact**
>
> As of December 2023, the five largest constituents of the Hang Seng Index were HSBC Holdings, Alibaba, Tencent, AIA Group, and China Construction Bank.

## Analyzing the Structure of the Hang Seng Index

The HSI is a [free-float-adjusted](https://www.investopedia.com/terms/f/freefloatmethodology.asp), market-cap-weighted index calculated in real time every two seconds during HKEx trading hours. It's a price index without cash dividend or warrant bonus adjustments.

The index targets the largest and most liquid stocks trading on HKEx. The number of constituents can vary from one period to another. As of December 2023, there were 82 stocks in the index.

HSI companies also fall into one of four sub-indexes: finance, utilities, properties, and commerce and industry.

The HSI uses an 8% [capping](https://www.investopedia.com/terms/c/capped-index.asp) rule to prevent any single security from dominating the index.

A committee convenes quarterly to evaluate the index components and to decide if companies should be added or removed.  

### Exploring Different Variations of the Hang Seng Index

The Hang Seng HK 35 is an index of just the top 35 Hong Kong-based companies that generate most of their revenues outside of mainland China.

The Hang Seng Composite includes the top 95% of stocks by market cap on the Hong Kong exchange, totaling about 500 stocks.

> **Tip**
>
> A subsidiary of the Hang Seng Bank has maintained the Hang Seng Index since 1969.

## Breakdown of Industries Within the Hang Seng Index

The HSI covers several industries, each with specific weightings:

*   Financials (33.58%)
*   Information Technology (27.81%)
*   Consumer Discretionary (11.23%)
*   Properties & Construction (5.83%)
*   Energy (4.64%)
*   Telecommunications (3.95%)
*   Utilities (3.35%)
*   Healthcare (3.31%)
*   Consumer Staples (2.98%)
*   Conglomerates (1.56%)
*   Industries (0.97%)
*   Materials (0.81%)  
    

## Leading Constituents of the Hang Seng Index

As of December 2023, the top 20 index holdings and their weightings were:

1.  HSBC Holdings (8.61%)
2.  Alibaba Group Holding Limited (8.29%)
3.  Tencent (7.49%)
4.  AIA Group Ltd. (7.23%)
5.  China Construction Bank (4.64%)
6.  Meituan (4.48%)
7.  China Mobile (3.67%)
8.  HKEX Group (2.98%)
9.  Industrial and Commercial Bank of China (2.60%)
10.  Xiaomi Corp. (2.52%)
11.  Bank of China (2.30%)
12.  Ping An Insurance Group of China (2.19%)
13.  BYD Company (2.06%)
14.  CNOOC Ltd. (1.87%)
15.  Li Auto (1.87%)
16.  JD.com Inc. (1.81%)
17.  Techtronic Industries Co. Ltd. (1.34%)
18.  CLP Holdings Limited (1.20%)
19.  Sun Hung Kai Properties Ltd. (1.13%)
20.  Link Real Estate Investment Trust (1.04%)

## How Many Stocks Are in the Hang Seng Index?

As of December 2023, the HSI was composed of 82 of the largest (by market cap) stocks traded on the Hong Kong Stock Exchange. The exchange, for reference, lists the stocks of around 2,600 companies.

## How Do You Invest In the Hang Seng Index?

You can invest in the HSI via [Hong Kong ETFs](https://www.investopedia.com/articles/investing/122915/top-5-etfs-track-hang-seng-2016-ewh-fxi.asp) such as the iShares MSCI Hong Kong ETF ([EWH](https://www.investopedia.com/markets/quote?tvwidgetsymbol=EWH)) and the Franklin FTSE Hong Kong ETF ([FLHK](https://www.investopedia.com/markets/quote?tvwidgetsymbol=FLHK)). The KraneShares Hong Kong Tech ETF ([KTEC](https://www.investopedia.com/markets/quote?tvwidgetsymbol=KTEC)) tracks 30 high-tech stocks in the Hang Seng Composite index.

## What Is the Biggest Stock Market in Asia?

As of January 2024, China's stock exchange was the largest equity market in Asia, with an $8.5 trillion market capitalization. On Jan. 22, 2024, India's stock market overtook Hong Kong's to become the fourth-largest stock market in the world, with a market cap of $4.3 trillion.

## The Bottom Line

The Hang Seng Index (HSI) is a key barometer of Hong Kong's economy and a major indicator for broader Asian markets. It tracks 82 companies across sectors like finance, utilities, properties, and commerce and industry, covering about 65% of HKEx's total market cap.

Using a free-float market cap-weighted system with an 8% cap per stock, the HSI maintains balance and undergoes quarterly reviews to stay relevant. Investors can gain exposure to the HSI through Hong Kong-focused ETFs.

> **Article Sources**
>
> 1.  Hang Seng Indexes Company Limited. "[Hang Seng Index](https://www.hsi.com.hk/eng/indexes/all-indexes/hsi)."
>     
> 2.  Hang Seng Indexes Company Limited. "[Hang Seng Index Fact Sheet](https://www.hsi.com.hk/static/uploads/contents/en/dl_centre/factsheets/hsie.pdf)." Page 1.
>     
> 3.  Hang Seng Indexes Company Limited. "[Company Profile](https://www.hsi.com.hk/eng/about-us/company-profile)."
>     
> 4.  Hang Seng Indexes Company Limited. "[Hang Seng Index Fact Sheet](https://www.hsi.com.hk/static/uploads/contents/en/dl_centre/factsheets/hsie.pdf)." Page 2.
>     
> 5.  Hang Seng Indexes Company Limited. "[Index Methodology, General Guide on Hang Seng Indexes Co Ltd](https://www.hsi.com.hk/static/uploads/contents/en/dl_centre/methodologies/index_methodology_guide_e.pdf)." Pages 7, 14-16, 22.
>     
> 6.  Hang Seng Indexes Company Limited. "[Hang Seng Index and Sub-indexes, Index Methodology](https://www.hsi.com.hk/static/uploads/contents/en/dl_centre/methodologies/IM_hsie.pdf)." Page 5.
>     
> 7.  Hang Seng Indexes Company Limited. "[Hang Seng HK 35](https://www.hsi.com.hk/eng/indexes/all-indexes/hk35)."
>     
> 8.  Hang Seng Indexes Company Limited. "[Hang Seng Composite Index](https://www.hsi.com.hk/eng/indexes/all-indexes/hsci)."
>     
> 9.  Hong Kong Exchanges and Clearing Limited. "[Monthly Market Highlights](https://www.hkex.com.hk/Market-Data/Statistics/Consolidated-Reports/HKEX-Monthly-Market-Highlights?sc_lang=en)."
>     
> 10.  Bloomberg. "[India Tops Hong Kong as World's Fourth-Largest Stock Market](https://www.bloomberg.com/news/articles/2024-01-23/india-overtakes-hong-kong-as-world-s-fourth-largest-stock-market)."