Which index includes the largest companies trading on the Hong Kong Stock Exchange and covers about 65% of its total market capitalization?

• A. Nikkei 225
• B. DAX
• C. CAC 40
• D. Hang Seng

Answer: (D)

The main idea here is identifying the flagship index that represents the largest, most actively traded Hong Kong-listed companies and captures a large portion of the market’s value.

The Hang Seng index fits this description. It tracks the largest and most liquid stocks listed on the Hong Kong Stock Exchange and is designed to reflect the overall performance of the Hong Kong equity market. It is a market-cap-weighted measure, and because it focuses on big-cap, blue-chip names, it covers about 65% of the total market capitalization.

The other indices are from different markets: the Nikkei 225 covers top Japanese stocks on the Tokyo Stock Exchange, the DAX covers 40 major German companies on the Frankfurt Exchange, and the CAC 40 covers 40 large French companies on Euronext Paris.