Hong Kong Stock Exchange – What is it, definition and concept | 2022

Therefore, we are facing a stock market similar to that of Madrid or Bombay. In this case, its headquarters are in Hong Kong, one of the two administrative regions with the highest degree of autonomy in the country and which, in turn, was a British colony in the past.

Hong Kong is a Chinese region of high economic development. This has allowed its capital market to be very active and large companies to be listed on it. The result has been a stock market of enormous national and international relevance.

History of the Hong Kong Stock Exchange

Let’s look at some important historical facts related to the Hong Kong Stock Exchange.

  • The Hong Kong Stock Exchange (HKSE) was officially founded in 1891, coinciding with the expansion of the tea market with Europe.
  • The Hong Kong Stock Exchange Association appeared in 1921, but was unified with the Hong Kong Stock Exchange after World War II (1947), keeping that name.
  • Its main index, the Hang Seng Index (HSI), was created by the Hang Seng Bank in 1969.
  • In 1989 it becomes a business holding company.
  • It had one of its biggest crises in 1987, when its index, the HSI, fell by more than 23%, forcing the Hong Kong Monetary Authority to intervene.
  • In 2001, the Hang Seng Composite Index Series appeared with 307 components and which allowed a broader criterion on the evolution of the market.
  • Its regulator is the Superintendence of Securities and Futures Ordinance (OFS), which appeared in 2003, having previously been the Securities and Futures Commission (SFC).
  • There is no legislation of its own, but rather internal operating regulations and good business practices.
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The Hang Seng Index (HSI)

The Hang Seng Index (HSI) is the most important indicator of this capital market. It is made up of the 44 largest companies in the region, which represent 65% of the total capitalization. Its main task is to measure the evolution of these companies.

To be part of it, two requirements are needed. The first is the size, the company must be in the 90% of the largest in capitalization and volume. The second is time, since it must have been listed on that market for at least 24 months before entering the HSI.

Companies that make up the Hong Kong Stock Exchange

The HSI is made up of four sub-indices and, finally, we are going to look at some of the companies that make up each one.

  1. The financial, with companies such as HSBC Holdings plc, China Construction Bank or Ping An Insurance, among others.
  2. That of services, with companies such as CLP Holdings Ltd or China Resources Power.
  3. That of properties, whose companies are dedicated to real estate, such as Sun Hung Kai Properties Ltd or China Resources Land Limited.
  4. The one of commerce and industry, with companies like Hutchison Whampoa Ltd or Sinopec Corp.

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