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Hang Seng Index (abbreviated: HSI, Chinese: 恒生指數) is a capitalization-weighted stock market index in the Hong Kong Stock Exchange. It is used to record and monitor daily changes of the largest companies of the Hong Kong stock market and as the main indicator of the overall market performance in Hong Kong. These 36 (soon to be 38) companies represent about 65% of capitalization of the Hong Kong Stock Exchange.


恒生指數是香港股市價格的重要指標，指數由若干隻成份股（即藍籌股）市值計算出來的，代表了香港交易所所有上市公司的70%市值，恒生指數由恒生銀行屬下恒指服務有限公司負責計算。
HSI was started on November 24, 1969, compiled and maintained by HSI Services Limited, which is a wholly owned subsidiary of Hang Seng Bank, the second largest bank listed in Hong Kong in terms of market capitalisation. It is responsible for compiling, publishing and managing the Hang Seng Index and a range of other stock indexes, such as Hang Seng Composite Index, Hang Seng HK MidCap Index, etc.
The Hang Seng Composite Index Series (恒生綜合指數) was launched on October 3, 2001, targeting on providing a broad standard of the performance of the Hong Kong stock market. Comprising the top 200 listed companies in terms of market capitalisation, it is composed of the geographical series and the industry series. The market capitalization of these companies accounts for about 97% of the total capitalization of the stocks in Hong Kong. To ensure fairness in its activities, the HSI Services established the Independent Advisory Committee to give advice on issues regarding the management of HSI. The Committee keeps reviewing the constituent stocks of HSI. Usual changes are expected.
Another new HSI Services approved stock market index is the FTSE/Xinhua China 25 Index (a joint venture between the FTSE Group and Xinhua Finance) which was launched on October 25, 2004, targeting Chinese red chip (listed in Hong Kong but with Chinese controlling shareholders) companies.

Selection Criteria for the HSI Constituent Stocks
HSI constituent stocks are selected with the use of extensive analysis, together with external consultation. To be qualified for selection, a company:

must be among those that comprise top 90% of the total market value of all ordinary shares;
must be among those that comprise top 90% of the total turnover on the Stock Exchange of Hong Kong Limited "SEHK" (香港交易所);
should have a listing history of 24 months; and
should not be a foreign company as defined by the SEHK.
Among the eligible candidates, final selections are based on their:

market capitalisation and turnover rankings;
representation of the respective sub-sectors within HSI; and
financial performance.
Calculation Formula for HSI
The current Hang Seng Index is calculated from this formula:


圖片參考：http://upload.wikimedia.org/math/d/9/2/d927e4f1d5537151af34a92ab6bb21f9.png

Descriptions on parameters:

P(t)：Current Price at Day t
P(t-1)：Closing Price at Day (t-1)
IS：Issued Shares
FAF：Freefloat-adjusted Factor, which is between 0 and 1, adjusted every six months
CF：Cap Factor, which is between 0 and 1, adjusted every six months
Representativeness of the HSI
The representativeness of the HSI can be studied by the turnover of the whole stock market and by how much its market capitalisation covers. The aggregate market value of the HSI constituent stocks is maintained at approximately 70% of the total market value. This coverage ratio is a positive sign when compared with major overseas stock indices.
The representativeness of the HSI can also be observed by its resemblance with the movements of the All Ordinaries Index (AOI) compiled by the SEHK, which includes all listed stocks on the SEHK.