In general, 2022 has been a poor-performing year for equities. With rising interest rates and inflation, global uncertainty due to the Ukraine-Russia war and worldwide supply chain issues, investors are wary of the future of listed companies, and are naturally less bullish on expectations for future earnings and growth.
The Hang Seng Index (HSI), Hang Seng ESG 50 Index (HSESG50) and Hang Seng TECH Index (HSTECH) are three indexes that track major companies listed on the Hong Kong Exchange. These are typically some of the biggest companies from mainland China such as Tencent and Alibaba, and top companies from Hong Kong or have a strong presence in Hong Kong.
How Has The Hang Seng Index (HSI) Performed In 2022?
The Hang Seng Index (HSI) is one of the earliest stock market indexes in Hong Kong and was launched publicly in November 1969. It has become the most widely quoted indicator and is seen by many investors as a proxy for the overall performance of the Hong Kong stock exchange.
As of May 2022, the index has a total of 66 constituents, with the biggest components in the index being AIA (8.26%), HSBC (8.22%), Tencent (7.16%), Alibaba (7.05%), Meituan (6.78%) and China Construction Bank (5.33%). Do note financial and information technology stocks currently comprise about 63% of the weightage within the index.
Since the start of 2022, the HSI has seen a year-to-date (YTD) return of -7.15% and is currently trading at 21,725.
Hang Seng TECH Index Focuses On Technology Companies
For investors who want to take a closer look at technology companies listed on the Hong Kong Exchange, we should focus on the Hang Seng TECH index (HSTECH).
The HSTECH represents the 30 largest technology companies listed in Hong Kong with high business exposure to technology themes. As of May 2022, the top components in the index are Meituan (9.94%), Alibaba (8.55%), Kuaishou (7.90%), Tencent (7.75%), Xiaomi (7.62%) and JD (7.24%). Consumer technology companies comprise about 77% of the weightage within the index.
Similar to their US technology counterparts that have seen a significant decline in share price in 2022, the HSTECH has gone down about 15% for the year thus far and is currently trading at 4,808.
Hang Seng ESG 50 Index
ESG investing has been a theme that has grown in recent years as investors start to focus not only on the financial returns that a company can generate but also on other important non-financial factors such as environmental, social and governance matters. You can read up more about how ESG investing works and our views on why investors should care about this.
For those who prefer investing in companies that have shown to be leaders in the ESG space, we can look to the Hang Seng ESG 50 Index (HSESG50). The index captures the performance of the top 50 ESG leaders with relatively high market-capitalisation listed in Hong Kong. As of May 2022, top components in the index include AIA (10.81%), HSBC (10.45%), Tencent (9.11%), HKEX (7.18%), Ping An (5.59%) and China Mobile (5.46%).
Similar to both the HSI and HSTECH, the HSESG50 have suffered a decline of about 8.98% thus far in 2022.
Read Also: Chinese Tech Companies Are Down Over 70%: Is Now The Right Time To Invest?
Even without investing directly in the Hong Kong Exchange, Singapore investors can also gain exposure to these Hong Kong based indexes through Singapore-based ETFs such as the Lion-OCBC Securities China Leader ETF.
Short-term traders can also gain leverage exposure to these indexes via instruments such as Daily Leverage Certificates (DLCs). DLCs can allow traders to take either a long or short position in the market, and is one way to capture profits in the short term with investing directly into the indexes, especially when there is high volatility in the market.
Read Also: Using Daily Leverage Certificates (DLCs) In Volatile Stock Markets
The post Hang Seng Index Vs Hang Seng TECH Index Vs Hang Seng ESG 50 Index: Which Has Been The Best (Worse) Performing ETF In 2022? appeared first on DollarsAndSense.sg.
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