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The Hong Kong Stock Exchange is one of the most influential securities exchanges in Asia. The exchange is home to a wide variety of companies - a bulk of whom come from Mainland China. The exchange gives hundreds of Chinese companies access to foreign capital and liquidity, which makes the exchange of high strategic importance to Hong Kong and China alike.
Here are some quick facts about the Hong Kong Stock Exchange:
The Hong Kong Stock Exchange is one of the largest exchanges in Asia and the primary way for Chinese-listed companies to gain some much-needed overseas liquidity. The exchange is also a pioneer in terms of technological advancements and provides sophisticated trading systems for market participants to enable high-frequency trading and complex strategies.
"Our role is to essentially be a great connector and that's why we want to be a great connector to every economic part of the world" - Nicolas Aguzin
The Hong Kong Stock Exchange is also a major contributor to the Hong Kong economy, with an annual economic impact of over $10 billion.
The Hong Kong Stock Exchange has a multi-layered approach when it comes to the listing requirements it upholds for applicant companies. Some of these requirements include:
Market capitalization/revenue/cash flow:
The company is also expected to have sufficient working capital for the next 12 months after the listing
The Hong Kong Stock Exchange is a for-profit exchange that generates revenue through a few different sources, such as:
The Hong Kong Stock Exchange charges a one-time and recurring listing fees for constituent companies, which can vary greatly based on the number of shares, industry, and the type of security being listed. The general listing fees for equities can be broken down as follows:
For secondary listings:
The Hang Seng Index is the primary index of the Hong Kong Stock Exchange and is closely tracked by institutional investors. The index is made up of 73 of the largest companies listed on the SEHK.
The Hangs Seng Index is a market capitalization-weighted index that tracks 73 of the largest companies listed on the Hong Kong Stock Exchange. The index was first published in 1969 and is managed by Hang Seng Indexes Company Limited - a subsidiary of the HKEX.
The index is calculated using a free float-adjusted market cap-weighted methodology, which means that larger companies have an outsized impact on the performance of the index.
The HSI, as well as most of the global economy, endured a tough year in 2022 but has rebounded significantly since the start of 2023.
Sector weighting on the Hang Seng Index, or HSI, is distributed thusly:
|Sector||Weight||Number of Members|
|Properties & Construction||7.11%||13|
According to the table, the financial and information technology sectors account for over 60% of the weight of the HSI, which makes it one of the most concentrated indexes in the world and provides a clear picture of what purpose the SEHK serves within Hong Kong and Mainland China.
As for individual constituents, here’s how the 10 largest HSI members are weighted:
|Company||Stock Code||Industry||HSI Weight|
|Tencent Holdings||0700||Information Technology||8.87%|
|AIA Group Ltd||1299||Financials||8.06%|
|Alibaba Group Holding Ltd||9988||Information Technology||7.69%|
|China Construction Bank||0939||Financials||4.24%|
|Hong Kong Exchanges and Clearing||0388||Financials||3.10%|
|China Mobile Ltd||0941||Telecommunications||2.95%|
|Ping An Insurance||2318||Financials||2.76%|
The Hang Seng China Enterprises Index, or HSCEI, is a stock market index that tracks the performance of the 50 largest Chinese companies listed on the Hong Kong Stock Exchange.
Similarly to the HSI, the HSCEI is also weighted based on a free float-adjusted market cap methodology, which means that the largest members will have a bigger impact on the performance of the index. The 50 members of the index are some of the largest corporations in Mainland China and include H-shares and red chip companies from the country.
The weight allocation by market sector within the HSCEI members can be broken down as follows:
|Sector||Weight||Number of Members|
|Properties & Construction||4.03%||5|
Much like the HSI, the HSCEI is also dominated by the financial and information technology sectors. It is also worth noting that there are no constituents from the materials sector.
The largest stock on the SEHK is HSBC Bank (HKG:0005), which has a market capitalization of over $143 billion (HKD 1.1 trillion).
The Hong Kong Stock Exchange is home to over 2,500 public companies from over 30 countries in Asia and beyond. The SEHK is home to hundreds of stocks from Mainland China.
The Hong Kong Stock Exchange is one of the largest stock exchanges in Asia, with a total market cap of over $4.6 trillion.