The Hang Seng SCHK Financials Index (HSSCF) tracks the performance of financial companies listed on the Hong Kong Stock Exchange. The sector-focused index is a segment of the broader Hang Seng Composite Index (HSCI) and holds stocks operating in banking, insurance, asset management, and other financial activities. Many of these companies are pivotal in providing credit, facilitating transactions, and driving economic activity throughout the region.
Hang Seng SCHK Financials Index Price & Chart
Financial institutions are widely regarded as essential barometers of economic health with their earnings are highly sensitive to changes in interest rates, lending volumes, and regulatory environments.
The index, which was launched in July 2023, includes established names such as ICBC, HSBC, AIA, and Bank of China, offering investors a broad view of the financial sector in Hong Kong and, by extension, the broader Chinese market. The index constituents number is variable and it presently holds approximately 50 companies.
Hang Seng SCHK Financials Index Performance
The index has performed fairly well over the last year or so, experiencing a strong 2023, unlike some of the other Hang Seng sector-specific indexes. The price surged to a new high in October 2024, and despite a pullback since then, it has remained resilient and not too far off those levels.
| Period | Total Return |
|---|---|
| 1-Year Return | +30.43% |
| 3-Year Return | – |
| 5-Year Return | – |
| 10-Year Return | – |
Hang Seng SCHK Financials Index Top 10 Companies
The index is reviewed half yearly and rebalanced quarterly.
| Company | Weighting |
|---|---|
| ICBC | 10.69% |
| CCB | 10.41% |
| HSBC Holdings | 9.99% |
| AIA | 9.37% |
| HKEX | 9.36% |
| Bank of China | 8.75% |
| Ping An | 8.13% |
| CM Bank | 4.11% |
| ABC | 3.41% |
| China Life | 2.88% |
Hong Kong/China Financials Stocks Forecast
The Bull Argument: While there are various headwinds to consider, proponents of the financials sector in the region argue that ongoing economic recovery in China and improved credit conditions will boost profitability. Moody’s said in a 2025 outlook article that it expects credit conditions in China to steady in H1 2025 amid stimulus. However, they did note that geopolitics add risk. “The government’s stimulus efforts since late September will mitigate some impact from potentially higher tariffs from the US and risks related to the property market and local government debt,” said the firm.
Overall, bullish investors may believe that increased lending, combined with stable deposit growth, will underpin the sector’s performance in 2025. Furthermore, a more accommodative regulatory stance could support merger activity and capital market transactions. These factors may provide a bullish set-up for the sector this year.
The Bear Argument: However, risks remain. Moody’s also noted that the outlook for Chinese financial institutions in 2025 “remains negative on profitability pressures.” The firm wrote: “Weak credit demand, lower interest rates and slower economic growth will continue to pressure profitability and challenge asset quality, though supportive policies will ease some pressures.”
Furthermore, geopolitical uncertainties (especially now US President Trump has started his term) and regulatory interventions in China also pose risks that could dampen the sector’s growth prospects.
Our View: The Hang Seng SCHK Financials Index provides a focus on the financial sector’s performance in Hong Kong and China. Its diversified names, which include banking giants, insurers, and asset managers, make it a valuable gauge of the region’s economic health. While the sector is subject to cyclical fluctuations and regulatory shifts, its long-term fundamentals remain robust, and it has performed well recently. However, due to its sensitivity to interest rate changes and economic cycles, as well as the potential volatility in the near term, the index may experience short-term volatility. As such, investors should consider their risk tolerance and investment horizon when allocating capital to this sector.
Who Should Invest in Hong Kong/Chinese Financials Stocks
Investors interested in the sector may want to look at the iShares MSCI Hong Kong ETF. Financials hold a 63.4% weighting in this ETF. It holds the shares of several names listed in the Hang Seng SCHK Financials Index.
Overall, investors interested in the financials sector in Hong Kong and China will be:
Income-Focused Investors: Many companies within the financials sector offer consistent dividends, providing a reliable income stream. As of December 2024, the HSSCF’s dividend yield was 5.2%.
Long-Term Growth Investors: Those with a long-term perspective may benefit from the sector’s potential for capital appreciation as economic conditions improve.
Cyclical Investors: Investors comfortable with market cycles can use the sector’s tendency to outperform during economic recoveries.
Diversification Seekers: Adding financials exposure can help balance a portfolio, particularly for those heavily weighted toward growth or cyclical sectors.
