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Beginner’s guide to index | What is the HK50?

What is the HK50?

Hong Kong Hang Seng Index(HK50), also known as HSI Index or HS50 Index. It consists of the 50 largest and most liquid companies on the Stock Exchange of Hong Kong (SEHK). The HK50 represents about 63% of the market value of companies listed on the Hong Kong Stock Exchange, so it can be regarded as a representative index of Hong Kong’s blue-chip stocks.

HK50 Characteristics

The HK50 has the following two characteristics:
1. Representing the financial industry in Hong Kong
Hong Kong is the intersection of the Asian financial market, so investing in the HK50 means participating in the growth of Hong Kong’s financial industry.
2. One of the options for investing in China
Hong Kong and China’s economy are highly linked. Some of the China companies and United States-Chinese stocks are also listed on the Hong Kong Stock Exchange, such as: Alibaba, Ping An, Tencent, etc.

Overall, if investors are optimistic about the future economic growth of Hong Kong and even China, the HK50 will be a good reference indicator.

Constituent stocks of HK50

Hong Kong is a financial center, so most of the constituent stocks of the HK50 are financial stocks, the others are public utilities, real estate, industry and commerce, entertainment industry, etc.

The HK50 is reviewed on a quarterly basis. For the 50 eligible companies included in the HK50, the transaction values of the constituent stocks must be in the top 90% of the total transaction values of the Hong Kong Stock Exchange, and the company must have been listed for at least two years. In terms of quotes, the index is calculated in real-time every two seconds during exchange trading hours.

The calculation of HK50

The HK50 is calculated by measuring the market value of all companies listed on the Hong Kong Stock Exchange. Which means that, the larger the market value, the greater the proportion of constituent stocks.

Factors affecting the price volatility of the HK50

The price of the HK50 is affected by the following factors:

  • Economic events

Since Hong Kong’s reliance on China and the heavy weight of China companies in the HK50, the economic and political in China has played a key role in the index’s trend.

  • News

Various news about the outbreak of the COVID-19 may also have a significant impact on the price of the HK50. For example, during the peak of the Covid-19 from February to March 2020, the index fell by about 10.3%.

  • Company financial report

When the constituent companies of the HK50 release their earnings reports, be sure to keep an eye out for any significant changes in the market value of each company. If there is, and the company is heavily weighted in the HK50, then the company will influence the trend of the index.

  • Interest Rate Decision

In general, when interest rates fall, markets tend to move higher. While when interest rates rise, the market reacts negatively, HK50 may react the same. In view of this, the market needs to pay close attention to the interest rate decisions of major central banks that may cause short-term volatility.

  • Exchange rate fluctuation

The strength of currencies such as the Hong Kong dollar, Swiss franc and Japanese yen may affect directly to the performance of the HK50 constituent companies, which will affect the index in turn. HK50 companies have operations around the world, which means their earnings are also affected by various exchange rates. If these exchange rates fluctuate frequently, the price of the index will also be affected.

How to trade HK50 on HXFX?

1. First, click here to register an HXFX account for free.
2. Next, download the APP and log in to complete the real-name authentication.
3. Contact customer service to receive your exclusive free trial bonus.
4. Click “Quote”, select “HK50” and click “Trade”. After the quotation page is displayed, you can click “Sell” or “Buy” to trade the index according to the trends.

5 advantages of foreign exchange trading

1. Leverage system
Investing a small amount of money will bring greater benefits, but may also bring greater risk of loss.
2. Low transaction costs
There are basically no handling fees, government taxes, etc.
3. Two-way transaction
Whether you are buying first and then selling in a bullish trend, or selling first and then buying in a bearish trend, you can get profit.
4. 24 hours trading
It is available in 24 Hours, investors can trade according to their own time.
5. High liquidity
In the foreign exchange market, investors could exchange foreign currency at any time, even complete their transactions in a short time.

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Disclaimer: Information above can only be use for references and doesn’t represent our platform’s opinions.

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