International stock markets revealed: The ins and outs of the Hang Seng

Julie Brownlee, Fsp Invest, 29 Sep. 2014

Tags: hang seng, emerging market, hong kong stock market index, hang seng sectors, breakdown of hang seng,

One of the most quoted emerging stock market indexes is Hong Kong’s Hang Seng.

It contains many Chinese listed companies. And it contains Tencent. Johannesburg Stock Exchange listed stock Naspers has a hefty stake in it.

So what type of companies make up this key index in the East?

Let’s take a closer look…

The characteristics of the Hang Seng

As with many emerging markets, the Hang Seng index has more exposure to economic ups and downs than developed world stock markets, such as the FTSE in London.

An astounding 82% of its sectors are cyclical in nature. Defensive stocks only make up around 4% to 8% of the index.

Have a look at the chart below. It shows the breakdown of the Hang Seng by sector…

Breakdown of Hang Seng sectors

The Hang Seng is very heavy in financial companies

As you can see from the above chart, the financial sector makes up an incredible 54.55% of the index.

Emerging markets as a whole do tend to have a heavy weighting in banks and insurance companies, but never more so than the Hang Seng.

The second biggest sector is technology. This makes up nearly 10%.

Closely following this is oil & gas and telecommunications at 9.30% and 8.30% respectively.

Industrials and utilities are the smallest sectors with less than 5% each.

The Hang Seng contains 48 companies. A significant number of these companies have their base in China. These companies include the Bank of China, China Mobile and Tencent.

So there you have it, the ins and outs of the Hang Seng.

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