Hong Kong Index

What Is the Hang Seng Index?

The Hang Seng Index (HSI) is the most widely recognised stock market index of Hong Kong. Launched in 1969 by Hang Seng Bank, it tracks the performance of the largest and most liquid companies listed on the Hong Kong Stock Exchange. The index is considered a key indicator of the overall health of Hong Kong’s equity market and its economic environment. It includes major firms from finance, real estate, utilities, and technology sectors, offering a diversified view of the region’s business ecosystem.

As of recent updates, the HSI consists of around 80 companies, chosen based on market capitalisation and trading volume, with a long-term plan to expand toward 100 constituents. For global investors, the Hang Seng serves as a barometer for Chinese-linked businesses because many of its listed firms operate in mainland China. For Indian investors, following the HSI provides insight into how Asian markets interact with global economic events and trade flows.

How to Invest in Hang Seng from India?

If you are based in India and wish to invest in the Hong Kong stock index, there are structured steps you need to follow.

• Open an international trading account: Indian residents must choose a broker offering global market access. These brokers allow you to buy shares listed on the Hong Kong Stock Exchange.
• Use the Liberalised Remittance Scheme (LRS): The Reserve Bank of India allows Indian residents to remit up to USD 250,000 per financial year for investments abroad. This provision is essential when you send money overseas to purchase Hong Kong securities.
• Choose your investment product: You may directly purchase stocks of Hang Seng index companies or invest in Exchange-Traded Funds (ETFs) that track HSI. International ETFs often trade on markets like the NYSE or London Stock Exchange, and some Indian mutual funds provide indirect exposure through feeder funds.
• Understand taxation: Profits earned on international shares are taxed in India under capital gains tax rules. Dividends are taxable, and foreign tax deductions may apply depending on treaties.
• Monitor exchange rates: Since your investment involves converting INR to HKD, fluctuations in currency impact your returns. For instance, if rupee weakens against the Hong Kong dollar, your net returns decrease even if the index rises.
• Execute trades and track performance: Once funds are remitted and trades are executed, regularly monitor the index’s movement and the broader Hong Kong market conditions.

History and Development of the Hang Seng Index

The Hang Seng stock index was launched on November 24, 1969, by Hang Seng Bank, one of Hong Kong’s leading financial institutions. At its inception, the index started with a base value of 100 points, intended to provide a clear measure of the overall performance of the Hong Kong stock market. Since then, HSI has become the most widely tracked benchmark for Hong Kong’s equities, much like the Dow Jones Industrial Average in the U.S.

During its early years, the Hong Kong index contained only 33 companies representing the core of Hong Kong’s economy, primarily banking, utilities, and property. Over the decades, it expanded to include more sectors to reflect the city’s transformation into a global financial and trade hub. The index now covers around 80 major companies that collectively account for the majority of the Hong Kong Stock Exchange’s market capitalisation.

HSI has witnessed numerous historic milestones. It crossed 10,000 points in 1993 as Hong Kong’s role in Asian finance grew. The Asian Financial Crisis of 1997 and the Global Financial Crisis of 2008 triggered sharp declines, highlighting the index’s sensitivity to regional and global economic shocks. However, recoveries in the following years demonstrated its resilience and the strength of companies driving the index.