Want to get exposure to the Honk Kong stock market? The Hang Seng Index is a stock index that tracks the 50 largest companies in Hong Kong. In this article, we’ll show you how to invest in the Hang Seng Index in the UK.
- 1 How to Invest in Hang Seng Index UK Quick Tutorial
- 2 Step 1: Select a Hang Seng Index UK Investment Platform
- 3 Step 2: Choose How you Want to Invest in the Hang Seng Index UK
- 4 Step 3: Research Hang Seng Index Investment
- 5 Step 4: How to Invest in Hang Seng Index on eToro
- 6 eToro – Best Broker to Invest in the Hang Seng Index UK
- 7 FAQs
How to Invest in Hang Seng Index UK Quick Tutorial
Decide on a broker to invest with in the Hang Seng Index UK: We recommend an FCA-regulated broker like eToro that allows you to trade with 0% commissions.
- Sign up for an account: Open an account with eToro or your chosen broker. You only need to provide your ID proof (passport or driver’s license), address proof (utility bill or a bank statement), and a few personal details.
- Deposit money into the account: Deposit some money into the account you just created. eToro allows you quick and easy deposits through debit/ credit card, e-wallets or bank transfer.
- Invest in Hang Seng Index UK: Use the search bar to search for the Hang Seng Index UK and enter the value you want to invest ($50 minimum). Click ‘Open Position’ to complete your trade.
Step 1: Select a Hang Seng Index UK Investment Platform
To be able to invest in the Hang Seng Index UK, the first critical step that you must take is figuring out the right stock broker. To make this step easy, we’ve reviewed two of the best stockbrokers and investment apps to trade the Hang Seng Index in the UK.
1. eToro – Best Trading Platform to Invest in Hang Seng Index UK
Our most highly recommended broker to invest in Hang Seng Index UK is eToro. eToro is among the world’s best brokerages, with more than 20 million users globally. It is used by both professional and non-professional traders and offers a wide range of trading products like shares, ETFs, indices and commodities.
An excellent feature of eToro is that this broker charges 0% commission for trading. That means you can buy shares you within the Hang Seng Index or buy the Hang Seng Index itself in the UK without having to pay any commission whatsoever. eToro does charge a small spread, but this is standard practise among UK brokers and is very inexpensive.
As though that were not attractive enough, eToro lets you invest in individual stocks within the Hang Seng Index. You can buy fractional shares with as little as $50 (£36 approximately), so you don’t have to commit a large amount at once. For instance, you can start by investing a small amount in Tencent Holdings, which is one of the topmost companies of the Hang Seng Index. You could then gradually increase your stake over time and pay no commission along the way.
eToro is regulated by the UK Financial Conduct Authority, which ensures a safe and secure environment for investing. The broker requires a $200 minimum deposit, which you can pay by credit or debit card or using an e-wallet like PayPal, Neteller, or Skrill. eToro’s customer support team is available 24/5.
- Regulated by FCA, CySEC and ASIC
- Build a Hang Seng Index portfolio by investing in Asian stocks
- Access over 2400 markets globally
- Do passive investing through use of Copy People feature
- Access to exclusive events and invites through eToro Club
- Easy Deposit via credit/debit cards, e-wallets, bank transfers
- $5 withdrawal fee
67% of retail investor accounts lose money when trading CFDs with this provider.
2. Libertex – Online CFD Broker that offers Hang Seng Index trading
Libertex is a CFD broker that operates in the UK and has served more than 2.2 million clients. When trading CFDs (contracts for difference), you don’t own the underlying asset. The advantage of this type of trading is that you can use leverage to increase your effective position in the Hang Seng Index without having to invest more money upfront.
CFD trading is speculative in nature and can be applied to different assets including stocks in the Hang Seng Index. For instance, you can invest in CFD on a Hang Seng Index stock like Alibaba Group.
Libertex is different from other CFD brokers in the UK in that it charges fixed commissions for trading, not variable spreads. Libertex’s trading fees are very inexpensive, so this broker can be a good choice if you’re looking to pay as little as possible to invest in the Hang Seng Index in the UK.
Libertex.com offers a variety of payment options including debit/credit cards, bank transfers, Skrill, Giropay and more. The broker is authorized and regulated by CySEC (the Cyprus Securities and Exchange Commission). CySEC is a regulatory authority that ensures fair and safe trading for consumers.
- Easy to place orders
- Simple and user-friendly interface
- Fast switch between demo and real account
- Plenty of technical analysis
- Quick withdrawals
- Efficient customer service
- No support for Metatrader 4 and 5
- Charges on a few deposits/ withdrawals
- Ill-equipped section on education
83% of retail investor accounts lose money when trading CFDs with this provider.
Step 2: Choose How you Want to Invest in the Hang Seng Index UK
After you have made up your mind on your favored broker it is time for you to decide the how you want to invest in the Hang Seng Index UK. There are a few different ways to invest in the Hang Seng Index in the UK, and each has its own benefits and risks.
Hang Seng Index Trading
Hang Seng Index trading allows you to trade the index itself instead of individual stocks on the Hong Kong stock market. The benefit of trading indices is that you get exposure to the entire spectrum of stocks in the index and not just an individual stock. So, if one stock does badly you need not worry as you are exposed to 50 stocks, not just one.
While trading the Hang Seng Index you can use either CFD or futures trading, both of which are types of derivatives trading. With CFD trading, you speculate on the current price of the Hang Seng Index without actually owning it. With futures trading, you are speculating on the future price of the index, so you must be right about the size and timing of any price movement.
Hang Seng Index Tracker Funds
Tracker funds are mutual funds and ETFs that essentially track the underlying index. A good Hang Seng Index tracker fund will invest in the same companies that the index tracks in the same relative weights. The performance of the tracker fund should be highly similar to the index. So, you could create a diversified portfolio by simply investing in a Hang Send Index fund.
The chart below from the Financial Times shows that the Hang Seng Index ETF has given a return of 21.52% in the last one year.
Hang Seng ETFs & Stocks
The third way you can invest in the Hang Seng Index is buy buying individual shares from the index. For example, you could invest in shares of Tencent Holdings or Alibaba without buying all of the companies in the Hang Seng Index.
The advantage of buying individual stocks from the Hang Seng Index is that you have the flexibility to create your own portfolio. However, you need to put more time and effort towards portfolio management to see a strong return over time.
Step 3: Research Hang Seng Index Investment
In this section, we’ll take a closer look at what the Hang Seng Index is and whether it makes sense as a short or long term investment. We’ll also looks at ways to make money from investing in the Hang Seng Index in the UK using time-tested investment strategies.
What is Hang Seng Index?
The Hang Seng Index is an index of the 50 largest companies (in terms of market capitalization) in Hong Kong. It serves as a primary indicator of the health and performance of Hong Kong’s financial market. The Hang Seng Index started in 1969 and includes companies from diverse industries and sectors such as banking (HSBC), real estate (Sino Land Company), utilities (Hong Kong and China Gas Company) and others. More recently, it has added Chinese tech giants like Tencent and Alibaba.
Is the Hang Seng Index a Good Investment?
Hong Kong is one of the leading economies in Asia and the main point of entry for UK investors to get exposure to Chinese stocks. Best-in-class global companies like HSBC (Hong Kong and Shanghai Banking Corporation) in the banking sector call the Hong Kong Stock Exchange home. Chinese companies like Alibaba and Tencent are also listed in Hong Kong and are part of the Hang Seng Index.
The Hang Seng Index is known to have given robust returns over the decades and can be an excellent destination for smart investors to park their money. Over the last year, the index grew by more than 21%. The index is primarily composed of blue-chip stocks, which are typically very reliable and experience less volatility than many stocks in emerging markets in Asia.
The Hang Seng Index can be a particularly good choice for investors who want to diversify their portfolio to include Asian stocks. By adding this index to your portfolio, you may be protected against market downturns in the UK, Europe, or the US.
How to Make Money from Investing in Hang Seng Index
There are a couple of ways to make money from investing in Hang Seng Index depending on the time, money and effort you are willing to invest. If you want to set your investment and then forget about it, a passive route to investing in the Hang Seng Index might be best. In that case, you could invest in a Hang Seng Index tracker fund. These are automatically managed on your behalf by professional fund managers.
Alternatively, you could take an active role in your investment and set up your own portfolio of companies from the Hang Seng Index. For instance, if you think Tencent Holdings is a great company, you could buy that individual stock. Likewise, if you bought Alibaba and think the stock is poised to lose value, you could remove it from your portfolio. With this approach, you have complete flexibility and the option to design your own portfolio to maximize your returns.
Hang Seng Index Investment Strategies
Long term investing strategies are typically the most effective strategies when it comes to the Hang Seng Index. So, you could invest a lump sum amount for a long period and fetch good returns.
A good idea is to use dollar-cost averaging. This means you would invest just £100 or £200 every month regardless of whether the price is high or low. Over time, you end up with an average entry price that evens out these highs and lows.
If you invest in individual companies from the Hang Seng Index, you can also spread your risk out by diversifying your investments in different market sectors. The index represents various sectors like finance, commerce and industry. So, for instance, you can have exposure to banking and insurance sector on one hand and technology companies on the other. This way you diversify your risk so that if one sector is languishing, your whole portfolio does not suffer.
Step 4: How to Invest in Hang Seng Index on eToro
We’ll show you how to invest in the Hang Seng Index in the UK using eToro, our top-rated FCA-regulated broker. We recommend eToro since you can invest in the Hang Seng Index without paying any commissions.
Step 1: Open an eToro Account
First, go to the eToro website or investment app and click ‘Join Now’. Then you will see a screen like the one shown below. Here enter your personal details like your name and email and click ‘Create Account’.
Step 2: Upload ID proof and Address Proof
eToro is an FCA-regulated broker, so you need to verify your identity address. Upload a copy of your ID (driver’s license or passport) and proof of address (a copy of your utility bill or bank statement).
Step 3: Deposit Money
Put money into your account so you can invest in the Hang Seng Index. You can pay using a debit card, credit card, e-wallet (PayPal, Neteller, or Skrill), or bank transfer. eToro requires a minimum deposit of $200.
Step 4: Search for Hang Seng Index Stocks
Search for the Hang Seng Index or the individual stock you wish you add to your portfolio. Let’s say for instance that you’re keen on Tencent Holdings.
Just type ‘Tencent’ in the search box on the top and click on the first search result as in the image below.
Step 5: Place Your Trade
Finally, place your trade with eToro. Simply click the ‘Trade’ button as shown in the image below. You can then enter the amount you wish to invest and click ‘Open Trade.’
With this you just finished the first trade by buying a stock on Hang Seng Index. Now you can replicate the 4th and 5th steps to buy more stocks like Alibaba Group, Xiaomi and others to build a portfolio from the Hang Seng Index.
eToro – Best Broker to Invest in the Hang Seng Index UK
The Hang Seng Index can be a good investment if you want exposure to the Asian equity market. While the Hang Seng Index can have more risk compared to US and European market indices, it offers exposure to fast-growing stocks from China and the rest of Asia.
Ready to invest in the Hang Seng Index in the UK? Click the link below to get started with eToro today and pay no commissions for trading!
67% of retail investor accounts lose money when trading CFDs with this provider.
Should I invest in Hang Seng Index?
It depends on your risk appetite. Hang Seng Index comprises of stocks of mostly large Asian companies, so there is a greater scope for more returns. It also allows you more geographical diversification of risk. The index might be riskier than its US and European counterparts but offer higher returns as well. So, could be good for you if you are willing to take more risk for earning greater returns.
How can I day trade in Hang Seng Index?
You can day trade both the Hang Seng Index as well as its constituent stocks. You can use broker like eToro with 0% commission on stock trading.
What are the best Hang Seng Index companies to invest in?
The best companies ranking keeps changing from time to time. For instance, the Alibaba group was doing pretty well until recently, but the company remains strong. Innovative technology companies like Tencent and food-delivery firm Meituan are other great options.
What kind of returns can I make by investing in the Hang Seng Index?
The returns on the Hang Seng Index have fluctuated over a period of time. The last one-year return was great at 21.34%. However, last 3-year returns were in the negative at -7.24%. However, the returns over the last 5-year returns were at 39.28% which averages roughly at around 8% per year.
How much money must I invest in the Hang Seng Index?
This will depend on the amount of money you have available to invest, your risk tolerance and returns preference. If you have disposable funds and more appetite for somewhat high risk and return you could build an entire portfolio of 50 stocks in the Hang Seng Index. You could invest as low as £36 in each stock and build a robust portfolio with high potential returns.