I just noticed that many people are interested in investing in the Asian market but don't know where to start. If you want to get into the Chinese market but prefer not to get too involved, the Hang Seng Index might be a good option because you'll be exposed to major companies like Alibaba, Tencent, HSBC—all of which are included here. And this index moves quite a lot, providing opportunities for profit whether you trade daily or hold long-term.

The Hang Seng Index (HSI) I’m talking about tracks large-cap stocks with high liquidity on the Hong Kong Stock Exchange. About half of the stocks here are from mainland China, such as Xiaomi and Alibaba, which have been listed in Hong Kong since 1969. Currently, its market value exceeds 38 trillion dollars, making it the third-largest index in the world after NASDAQ and Shenzhen.

Why is it interesting? Because Hong Kong is Asia’s major financial hub, and today’s afternoon Hang Seng Index includes both Chinese and Hong Kong stocks, reflecting economic and financial changes in both regions well. It currently has 76 stocks in its list, with the financial sector weighting the most at 33.47%, followed by technology at 29.98%. The most influential stocks are Alibaba at 9.13%, Tencent at 8.70%, AIA at 7.69%, and HSBC at 7.34%.

The index is calculated using a market capitalization-weighted method, meaning larger market cap stocks have a bigger impact on the index’s movement. For example, Stock A valued at 1 billion dollars rising by 5 dollars, versus Stock B valued at 10 million dollars falling by 5 dollars, the index will be positive because Stock A has a greater influence.

Notably, over the past five years, the Hang Seng Index has delivered a negative return of -32.21%, despite China’s economy growing an average of 4.6% annually. The issues stem from China’s zero-COVID policies, city lockdowns, and real estate sector problems. However, since late 2022, authorities began easing measures, causing the index to rebound from 15,000 to 19,781.41 at the end of 2022.

For 2023-2026, many analysts expect China’s economy to grow over 5%, giving the Hang Seng Index a good chance to recover. Currently, the index is around 19,831, with an average daily trading volume of 2.4 billion dollars.

If you want to invest in this index, there are options. The first is buying individual stocks of all 76 companies weighted accordingly, but this requires a lot of capital—around 500,000 baht or more—and you need to manage everything yourself. The second is purchasing a fund that tracks the Hang Seng Index, such as ASP-HSI from Asia Plus, starting at just 5,000 baht, with professionals managing it. It can only be traded once a day, making it suitable for medium- to long-term investing. The third option is using CFDs, which require very little capital—just $50 or more—and allow profit from both rising and falling markets. Trading is available 24/7, but it carries higher risks and overnight fees.

However, you should also be aware of certain risks. There’s potential government intervention, trade conflicts with the US—such as the one that once caused Tencent and BYD stocks to be sold off by over 26 billion dollars in a single swoop—and the vulnerability of the Hong Kong dollar amid rising interest rates and capital flowing back to the US. Liquidity in Hong Kong has dropped to 38M dollars, the lowest in three years.

Overall, the Hang Seng Index this afternoon offers broad upside potential, especially considering its PE ratio remains relatively low at 9-11 times compared to other markets. But all investments come with risks, so choosing an investment method that matches your capital and time horizon is very important.