How to Trade the Hang Seng Index

Hong Kong is the third most important financial centre in the world after London and Wall Street. As such, more and more investors wish to trade the Hang Seng index. Is it difficult to find reliable information on this exotic index, to say the least? Don’t panic!

What is the Hang Seng Index

Have you been asking yourself, "What is the main Chinese stock market index?". The Hang Seng index is the stock market index of the 50 largest companies listed in Hong Kong. This index serves as an indicator of the economic health of Hong Kong and the companies included in the index represent approximately 60% of the capitalization of Hong Kong companies.

The Hang Seng Index was created in 1969 and is managed by the Hang Seng Bank, one of the largest banks in Hong Kong, which manages indices and economic data for the Hong Kong markets. Due to the close links between Hong Kong and China, the Hang Seng is a good indicator of the performance of Chinese companies, which are numerous in the index.

The Hang Seng 50 can be called different names by investors. We mainly know these names: Hang Seng 50, HangSeng50, Hang Seng Index, HK50, HSI50 or even the HSI index.

There a couple of other indexes that are similar to the Hang Seng. One of them is called the Hang Seng Composite Index. It was launched in 2001 and offers a benchmark of the Hong Kong market covering the top 95th percentile of the total market capitalization of all the companies on the Stock Exchange of Hong Kong (SEHK) Main Board.

This index is interesting for some traders as some argue that it better reflects the overall market performance than the Hang Seng stock index, which includes only 50 stocks compared to more than 480 on the composite index.

Another one is the Hang Seng Tech index. This index contains incorporated stocks from Greater China from companies that are largely connected to internet and technology markets, such as fintech, e-commerce, cloud computing and digital technology. Traders can trade this index like most other indexes. For example, if you are interested in a Hang Seng tech index ETF, you won't have any problems entering such a position.

How to Trade the Hang Seng

Perhaps you want to know how to invest in the Hang Seng index and you've been asking yourself, "How do I buy stocks in Hong Kong?". Let's look at how to trade the Hang Seng index today. Trading the Asian indices and that of Hong Kong, the third-largest financial centre in the world, is as simple and fast as it is for the US indices! It entails three basic steps:

• Choosing your HK50 trading account
• Learning how to buy the Hank Seng index
• Learning how to sell the HK50

Let’s look at each step in detail:

Hang Seng 5 Trading Accounts

Take advantage of the low spreads on the HK50 and HSI50 to trade opportunities up or down, depending on your current analysis! Have a look at an overview and comparison of all of these accounts here.

How to Buy the HK50

1. Log in to your Admirals trading account (WebTrader, MT4/MT5, Mobile App...)
2. Go to the Market Observation tab
3. Look for the HK50 or HSI50 index
4. Right-click on the index, then choose Graph Window to see a Hang Seng index chart
5. Once the graph is displayed, select your number of lots
6. Click on BUY using the One-Click Trading shortcut

How to Sell the HSI50

1. Log in to your Admirals trading account (WebTrader, MT4/MT5, Mobile App...)
2. Go to the Market Observation tab
3. Look for the HK50 or HSI50 index
4. Right-click on the index, then choose Graph Window
5. Once the graph is displayed, select your number of lots
6. Click on SELL using the One-Click Trading shortcut

Example of Trading the HSI50

• Purchase of 1 lot on the HSI50 at 26,500 points with a close of 50 points higher at 26,550. Knowing that with 1 lot, the value of a pip on the HSI is equal to 1 HKD (Hong Kong Dollar), this long position generates a gain of 50 X 1 HKD = 50 HKD (5.78 € at the current price of EURHKD on the date of publication of this article)
• Sell ​​1 lot on the HSI50 index at 26,500 points with a close 75 points lower at 26,425. As before with 1 lot, the value of a pip on the HSI50 is equal to 1 HKD, this short position then generates a gain of 75 X 1 HKD = 75 HKD (8.67 € at the EURHKD on the date of publication of this article)

The calculation is exactly the same for losing positions. Let's see the example of a Trade HSI50 with a losing purchase:

• Buy 1 lot at 26,500 points closing 30 points lower at 26,470 results in a loss of 30 X -1 HKD = -30 HKD (3.47 €).

Past performance is not a reliable indicator of future results, nor of future performance.

Whether you understand these examples very well or whether they are still unclear to you, in either case, nothing beats taking a concrete stand on a demo account to better understand how the HK50 and HSI50 indices work. Click the banner below to open a demo account today for free:

Do not hesitate to use the Admirals Trade Calculator to determine the value of a point on the HSI50, or the HK50, but also to calculate the gain or loss made on a position according to your leverage! This method is quicker and easier than Googling the price of the Hang Seng Index on Bloomberg or Hang Seng Index on Yahoo Finance and calculating it yourself.

Hang Seng 50 Futures vs. Cash

Should I trade HangSeng 50 Futures or cash?

Admirals allows you to trade the Hong Kong Futures CFD (Contract for Difference) Index and the HSI50 Spot CFD Index so that each investor profile can trade the asset that suits them best!

There are, however, 2 main advantages of trading the Hong-Kong Spot and Futures index:

• Low point value for 1 lot on the HSI50 and HK50: The point value is 1 HKD which equates to around 0.12 €! So, you can fully control your risk, even with a small starting capital.
• Low Margin needed to open a position: at the current HSI50 price and with a leverage of 20 (Personal Account), the margin needed to open a 1 lot position is only €153.12 (compared to €623.98 for trading the DAX under the same conditions). To open a position of 1 lot on the HSI with a leverage of 200 (Professional account) the necessary margin at the current price is €15.31 (against €62.40 to trade the DAX under the same conditions).

Leverage allows traders to make larger potential gains in the markets. Obviously, it is the same for potential losses. Traders risk losing their capital faster by using leverage - so use it with care.

Advantages and Disadvantages of HK 50 Futures

The Hang Seng 50 Index Futures contract is a financial security traded on regulated markets. The stock code for the HangSeng50 index is HK50.

The HK50 Futures CFD contract is particularly interesting to trade for swing traders and long-term investors because there are no swap fees on this financial instrument since the underlying asset HangSeng Index is traded on a regulated market. It is, therefore, suitable for swing trading, the financing costs (swap) being non-existent, they’re not likely to cut into your possible profits.

There is, however, a downside for traders who wish to take very long-term positions: the duration of the HK50 futures contract is one month. At the end of the term of the contract, your positions are automatically closed.

It’s quite simple to check the expiration date of the HK50 CFD futures contract:

1. Go to Market Watch
2. Right-click on the HK50 contract (in green)
3. Click Specification ...
4. Look at the line Last Trader

Advantages and Disadvantages of HK 50 Spot CFD

Unlike the HK50 Futures contract, the market code for the Hang Seng 50 Spot Index is HSI50 for HangSengIndex50. The HSI 50 is an economic aggregate, calculated by adding the value of each of the shares of the 50 companies that make up the index. As a result, it often happens that there’s a difference of several points between the HSI50 and the HK50.

The main advantage of the HK50 is that it doesn’t have an expiration date since it’s not a futures contract with a limited life. It is therefore ideal for a swing trader who would like to open a position on the Hang Seng index a few days, or even the day before the expiration of the HK50 futures contract. Thus, their positions will not be closed when the contract expires.

The downside to HSI is the swap fee. If the Hang Seng Spot allows swing traders to hold their positions for no time limit, they have to pay the financing (swap) fees each day until their trades close. Long-term investors will therefore have to trade movements large enough so that their possible profits are not eroded by these overnight costs.

HSI 50 Trading Hours

• 04:15am - 07:00am
• 8:00am - 11:30am
• 12:15pm - 7:59pm

Is the Hong Kong stock market open now? The Hong Kong index, like all Asian indices, has specific trading hours which are divided into three periods each day from Monday to Friday. So what are the Hang Seng 50 trading hours? The HK50 and HSI50 open from 4:15 am - 7:00 am, after a one hour break the market reopens from 8:00 am - 11:30 am, after the lunch break they quote continuously until the evening from 12:15 pm to 7:59 pm, Monday to Friday.

Unlike assets traded in the evening, the HangSeng index is ideal for the "early to bed, early riser" and any investor who wants to trade early in the morning before the European markets open.

Best Times to Trade the Hang Seng

• In the morning between 4:15am and 7:00am before the European opening
• Afternoon between 3:00 pm and 7:00 pm when the American markets open
• During the Economic Announcements of China and Hong-Kong

The 3 HSI and HK50 trading sessions allow you to visually and easily identify the best times to trade the Hong Kong stock market index.

The first interesting time slot for trading the Hong Kong stock market index is at the opening between 4:15am and 7:00am. There is often a peak in volatility which can be interesting to exploit, especially for scalpers and day traders. Indeed, we note an increase in volatility with traders who fall back on the Hong Kong stock exchange as the end of the first trading session of the Nikkei 225 approaches.

The second best time to invest in the HK50 and HSI is from the US markets open from 3:00pm to 7:00pm. In general, we observe a new peak in volatility with the establishment of a trend until the end of the day. This is not surprising, given that many more US investors are interested in Asian markets.

Finally, the time with the least volatility to trade the HK50 and the HSI is between 8am and 11:30am. Consolidation movements are often observed due to a lack of volume, with investors preferring to follow and trade the opening of the stock markets. European futures at 8:00am. and spot at 9:00am.

Trading HK50 Strategy and Indicators

• HK50 Scalping Strategy
• HSI50 Swing Trading Strategy

What trading strategies are best for the HK50? The best trading strategy is one that you have established, tested and are comfortable with!

You don't have a trading strategy yet? Take inspiration from our two trading strategies on the Hang Seng 50 index: a scalping strategy for traders who want to stay in position for a short time, and a swing trading strategy for investors who like to profit from large movements in markets!

Hang Seng 50 Scalping Strategy

Indicators:

• Average Directional Index (9)
• Exponential Moving Average (200)
• Exponential Moving Average (50)
• Exponential Moving Average (20)

Time Units: M1, M5, M15, M30

Instruments: HK50, HSI50

HK50 Buy Signal:

• Close of a candle above the 20 EMA
• The 20 EMA is above the 50 EMA which is, itself, higher than the 200 EMA
• The DMI+ crosses (or has already crossed) upwards the DMI-
• ADX is going up

Stop Loss and Take Profit in Long position on HSI50:

• Stop Loss placed a few points below the period 20 EMA
• Cautious Take Profit: Take Profit value in points = 2 x the value of the ADX at the opening of the position
• More aggressive Take Profit: close of the position if the price returns to the 20 EMA OR if the DMI+ crosses the DMI- OR if the ADX falls

HK50 Sell Signal:

• Close of a candle below the 20 EMA
• The 20 EMA is below the 50 EMA which is itself lower than the 200 EMA
• The DMI- crosses (or has already crossed) upwards the DMI+
• ADX is going up

Stop Loss and Take Profit in a Short position on HK50:

• Stop Loss placed a few points above the period 20 EMA
• Cautious Take Profit: Take Profit value in points = 2x the value of the ADX at the opening of the position
• More aggressive Take Profit: close of the position if the price returns to touch the 20 EMA OR if the DMI- crosses downwards the DMI+ OR if the ADX falls

HangSeng 50 Swing Trading Strategy

Indicators:

• Heiken Ashi
• Stochastic (15, 3, 5)
• Admiral Donchian (14)

Time Unit: H4, D1, W1, MN

Instruments: HK50, HSI50

Signal to Buy HSI50:

• Heiken Ashi were red (sellers) and turned blue (buyers)
• Heiken Ashi red candles recently touched the lower bound of the Donchian Channel
• The Stochastics returns above 20 (out of the oversold zone)

Stop Loss and Take Profit in Long position on HK50:

• Stop Loss placed on the lower bound of the Donchian Channel
• Careful Take Profit: placed on the upper limit of the Donchian Channel
• Take Profit more aggressive: closing the position when the first red Heiken Ashi appears (bearish)

HSI50 Sell Signal:

• Heiken Ashi were blue (buyers) and turned red (sellers)
• Heiken Ashi blue candles recently touched the upper terminal of the Donchian Channel 
• The Stochastic returns below 80 (out of the overbought zone)

Stop Loss and Take Profit in a Short position on HSI50:

• Stop Loss placed on the upper limit of the Donchian Channel
• Careful Take Profit: placed on the lower limit of the Donchian Channel
• More aggressive Take Profit: close of the position when the first blue Heiken Ashi appears (bullish)

Correlations on the Hong-Kong 50 Index

Like any asset, the Hong Kong HangSeng50 index is correlated with other financial instruments. These correlations can be interesting to study for traders who wish to hedge in the markets or for investors who seek confirmation signals on other assets before entering a position in the HK50.

To study the strength of correlations, you can use the EA (Expert Advisor) Admiral-Correlation Matrix available with MetaTrader Supreme Edition.

Source: MetaTrader 5 Supreme Edition - EA Admiral - Correlation Matrix - Published on October 18, 2019, at 2:53 pm

For intraday trading, we can compare the HangSeng50 index (HSI50 and HK50) with the EURUSD, the Dollar Index, the USDCNH and the USDJPY in an H1 chart over the last 100 hours.

We can see that the HK50 and HSI50 indices are strongly correlated at -82% with the dollar index and at +93% with the USDJPY pair! These two assets can therefore be useful for confirming intraday signals on the world's third-largest stock exchange.

For investors who trade the Hong Kong stock index on other time units, they can easily adapt the Correlation Matrix time unit. To improve the accuracy of the correlation of the HK50 and HSI with financial instruments over a specific unit of time, it may be useful to also study the correlation on the first upper time unit and the first lower time unit.

Composition of the Hang Seng 50

As the name suggests, the Hang Seng 50 consists of the 50 largest listed companies in Hong Kong. As of February 17, 2021, the Hang Seng Index constituents are:

Number Company Stock exchange code

1. Hang Lung Properties Ltd 101: HK
2. CK Infrastructure Holdings Ltd 1038: HK
3. Hengan International Group Co Ltd 1044: HK
4. China Shenhua Energy Co Ltd 1088: HK
5. CSPC Pharmaceutical Group Ltd 1093: HK
6. China Resources Land Ltd 1109: HK
7. CK Asset Holdings Ltd 1113: HK
8. Sino Biopharmaceutical Ltd 1177: HK
9. Hang Seng Bank Ltd 11: HK
10. AIA Group Ltd 1299: HK
11. Henderson Land Development Co Ltd 12: HK
12. Industrial & Commercial Bank of China Ltd 1398: HK
13. Xiaomi Corp 1810: HK
14. Sun Hung Kai Properties Ltd 16: HK
15. Geely Automobile Holdings Ltd 175: HK
16. New World Development Co Ltd 17: HK
17. Sands China Ltd 1923: HK
18. Wharf Real Estate Investment Co Ltd 1997: HK
19. Budweiser Brewing Co APAC Ltd 1876: HK
20. CK Hutchison Holdings Ltd 1: HK
21. Country Garden Holdings Co Ltd 2007: HK
22. Wuxi Biologics Cayman Inc 2269: HK
23. Shenzhou International Group Holdings Ltd 2313: HK
24. Ping An Insurance Group Co of China Ltd 2318: HK
25. China Mengniu Dairy Co Ltd 2319: HK
26. Sunny Optical Technology Group Co Ltd 2382: HK
27. BOC Hong Kong Holdings Ltd 2388: HK
28. China Life Insurance Co Ltd 2628: HK
29. CITIC Ltd 267: HK
30. Galaxy Entertainment Group Ltd 27: HK
31. WH Group Ltd 288: HK
32. CLP Holdings Ltd 2: HK
33. Bank of Communications Co Ltd 3328: HK
34. China Petroleum & Chemical Corp 386: HK
35. Hong Kong Exchanges & Clearing Ltd 388: HK
36. Bank of China Ltd 3988: HK
37. Hong Kong & China Gas Co Ltd 3: HK
38. HSBC Holdings PLC 5: HK
39. Techtronic Industries Co Ltd 669: HK
40. MTR Corp Ltd 66: HK
41. China Overseas Land & Investment Ltd 688: HK
42. Power Assets Holdings Ltd 6: HK
43. Tencent Holdings Ltd 700: HK
44. China Unicom Hong Kong Ltd 762: HK
45. Link REIT 823: HK
46. Meituan 3690: HK
47. PetroChina Co Ltd 857: HK
48. CNOOC Ltd 883: HK
49. China Construction Bank Corp 939: HK
50. China Mobile Ltd 941: HK

Follow HangSeng50 News

You can follow all the HangSeng news thanks to our three information tools:

• Hong Kong Economic Calendar
• HK50 and HSI50 Markets News
• Live Trading Sessions

Hong Kong Economic Calendar

You can use the economic calendar and follow the economic announcements for China and Hong Kong to trade the HK50 or HSI50 depending on the announcement versus expectations.

To select the ads directly related to the Hang Seng, in Filter, select Hong-Kong and China as in the example below.

HK50 and HSI50 Markets News

Do not hesitate to consult our Market Heat Map section regularly!

You will find many news and analyses published daily, some of which specifically concern China and Hong Kong, or related financial events/instruments.

Live Trading Sessions - HK50

Admirals organizes numerous live trading and analysis sessions in webinars, as well as training videos which are freely available on the Admirals YouTube Channel.

In the webinars, we review many assets including Asian indices such as the Hang Seng Index in real-time and when there is attention on the Asian market, we sometimes do a Hang Seng index compare of the Hang Seng index share price and other companies!

If we are covering the Hang Seng in a session, you'll find answers to common trading questions, such as, "Why is the Hangseng down today?" and others that will help you understand the behaviour of this index, how to more accurately predict its future movements and when and what kinds of positions to enter into in this index.

Trader training

• Online market trading
• How to Open a MetaTrader 5 Demo and Live Account
• Investing in Shares for Beginners - A complete investment guide

About Admirals

As a regulated broker, Admirals provides you with access to some of the most widely used trading platforms in the world. With us, you can trade CFDs, stocks and ETFs. Here is a recap of Why Trade with Admirals!

References

• Wikipedia
• Bloomberg
• Yahoo Finance
• Reuters
• Financial Markets Authority

INFORMATION ABOUT ANALYTICAL MATERIALS:

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:

• This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
• Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
• With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
• The Analysis is prepared by an independent analyst, Pierre Perrin-Monlouis (Financial analyst), (hereinafter “Author”) based on their personal estimations.
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