Hang Seng index

The make-up of Hong Kong’s benchmark index, the Hang Seng, shows why most emerging markets are considered geared plays on global growth: they are packed with cyclical stocks.

In the Hang Seng’s case, economically sensitive industries comprise around 80% of the index. In Western markets, cyclicals usually account for 60% of the market or less. Hong Kong’s financials – the biggest sector, accounting for almost 60% of the market – oil, industrials, and technology firms are in the cyclical category.

Telecoms, utilities and consumer goods (made up of personal and household goods as well as food and drink companies) are defensives.

• See Tim Bennett’s video tutorial: What is an index?