How to trade or invest in the Hang Seng Index

When you spread bet, you’ll be putting up a certain amount of capital per point of movement in the underlying market. Your profit or loss is calculated by multiplying your bet size by the number of points of movement.

You can spread bet on HS50:

• Cash indices: deal at the current price of the underlying market while receiving tight spreads. Popular among short-term traders
• Index futures: agree to trade the index at a specific price on a specific date. Popular among longer-term traders
• Options: buy the right (but not the obligation) to trade the index at a specified price in future. Popular among experienced traders with a long-term view
• ETFs: speculate on all Hang Seng-related stocks in a single position. Trade on the spot or using forwards (futures)
• Shares: trade on upward or downward price movements of Hang Seng-listed shares without owning them

Let’s look at an example. You decide to trade the cash index and you think the price of the Hong Kong HS50 is going to rise from its current level of 20,000. So, you go long at £10 per point and open your position by clicking ‘buy’ on our platform.

If the index’s price increased to 20,100 and you bet £10 per point, you’d earn a profit of £1000 (100 points x £10 per point) excluding any other costs you might incur like overnight funding.

If the index price dropped to 19,900 instead, moving against your prediction, you’d make a loss of £1000.

A contract for difference (CFD) is an agreement to exchange the difference in price of an underlying asset, as measured from the time the contract is opened until the time it’s closed.

So, however much the price of that asset has risen or dropped since you opened your position is what you stand to make as a profit or a loss, depending on whether your prediction is correct or incorrect.

Like with spread bets, you can trade CFDs on HS50:

• Cash indices: speculate on the current price of the underlying market and get tighter spreads. Short-term traders prefer this method
• Index futures: agree to trade the index at a predetermined price on a date in future. Longer-term traders prefer this method
• Options: buy the right (but not the obligation) to trade the index at a specified price in future. Experienced traders with a longer-term view prefer this method
• ETFs: trade all Hang Seng-related stocks, on the spot or using forwards, in a single position
• Shares: speculate on Hang Seng-listed shares’ prices rising or falling without owning them

Here’s an example of how CFD trading works. Say you believe that the HS50 cash index is set to rise from its current price of 20,000. So, you buy 10 CFD contracts on our index worth £5 per contract. Your prediction is correct, and you close your position when the sell price is 20,090. The difference is 90 points, multiplied by the £5 per contract multiplied by 10 contracts, so your profit is £4500 – excluding other costs.

If your prediction is incorrect and the market drops, and you closed your trade at a level of 19,950, your loss would be £2500 – excluding other costs.

You can invest in Hang Seng-related ETFs and stocks listed on the index* via a share trading account. Investing in shares outright means you own them, so you’re restricted to going long. It’s more suited to those who take a longer-term view of the market.

You won’t be trading with leverage when using our share dealing platform. Instead, as you’re buying the shares or ETF outright, you’ll commit the full value of the investment upfront.

You can invest in HS50:

• ETFs: buying Hang Seng-tracking ETFs is one of the most popular ways to get exposure to the entire index from a single position
• Shares: buying some of the top stocks* outright is also fairly popular, as it means you’d own a piece of a company you value, earn possible dividends and get shareholder voting rights
• Smart Portfolios: choose to have your investment portfolio managed by experts while still getting access to HS50 stocks and the index itself