Research on Investment Strategy of Hang Seng ETF Based on Hang Seng Index’s P/E Ratio

Research Article
Open access

Research on Investment Strategy of Hang Seng ETF Based on Hang Seng Index’s P/E Ratio

Lining Xue 1*
  • 1 Fudan University    
  • *corresponding author lnxue21@m.fudan.edu.cn
Published on 10 November 2023 | https://doi.org/10.54254/2754-1169/39/20231968
AEMPS Vol.39
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-83558-099-8
ISBN (Online): 978-1-83558-100-1

Abstract

The Hang Seng Index is commonly used by investors as a reference and benchmark for investing in the Hong Kong stock market. It comprises of approximately 40 stocks, mainly blue-chip companies in Hong Kong. The price-to-earnings ratio of Hang Seng Index is a predictive instrument for future price. By comparing price-to-earnings ratio with its historical data, investor would figure out whether the stock is overvalued or not. In this paper, the investment strategy uses performance over the past five years to decide whether to buy or sell. This research collectes data from 2013 to 2022 and tests the feasibility of the strategy. The result shows that the overall rate of return from 2018 to 2022 is 4.83%. After improvement, the rate of return increases to 5.51%, with less loss. This paper finds that price-to-earnings ratio plays a role in predicting market stock price and helps investors obtain more market information to develop an investment strategy with high returns.

Keywords:

Hang Seng Index, price-to-earnings ratio, investment strategy

Xue,L. (2023). Research on Investment Strategy of Hang Seng ETF Based on Hang Seng Index’s P/E Ratio. Advances in Economics, Management and Political Sciences,39,194-199.
Export citation

References

[1]. Francis, N. S.: Price-Earnings Ratios. Financial Analysts Journal 16(4), 43-45 (1960).

[2]. 2.Park, S.: The Business Cycle, and Timing the Stock Market. Journal of Porfolio Management 47(8), 165-183 (2021).

[3]. Zhong, G. H.: Hang Seng Index Price-earnings Ratio Mean Regression Problem. Times Finance 681(35), 173-174 (2017).

[4]. Shen, P.: The P/E Ratio and Stock Market Performance. Economic Review 85(4), 23-36 (2000).

[5]. Ang, A., Bekaert, G.: Stock Return Predictability: Is It There?. The Review of Financial Studies 20(3), 651-707 (2007).

[6]. Kumar, P.: Impact of Earning Per Share and Price Earnings Ratio on Market Price of Share: A Study on Auto Sector in India. International Journal of Research 5(2), 113-118 (2017).

[7]. Wisniewski, T. P., Lightfoot, G., Lilley. S.: Speculating on presidential success: exploring the link between the price-earnings ratio and approval ratings. Journal of Economics and Finance 36, 106-122 (2012).

[8]. Yan, X., Yang, H., Hou, C., Zhang, S., Zhu, P.: Portfolio optimization by price-to-earnings ratio network analysis. International Journal of Mordern Physics B 36(19), 2250107 (2022).

[9]. Nathan, S., Sivakumar, K., Vijayakumar, J.: Returns to Trading Strategies Based on Price-to-Earnings and Price-to-Sales Ratios. The Journal of Investing 10(2), 17-28 (2001).

[10]. Saputra, F.: Analysis Effect Return on Assets (ROA), Return on Equity (ROE), and Price Earning Ratio (PER) on Stock Prices of Coal Companies in the Indonesia Stock Exchange (IDX) Period 2018-2021. Dinasti International Journal of Economics, Finance & Accounting 3(1), 82-94 (2022).

Cite this article

Xue,L. (2023). Research on Investment Strategy of Hang Seng ETF Based on Hang Seng Index’s P/E Ratio. Advances in Economics, Management and Political Sciences,39,194-199.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

Disclaimer/Publisher's Note

The statements, opinions and data contained in all publications are solely those of the individual author(s) and contributor(s) and not of EWA Publishing and/or the editor(s). EWA Publishing and/or the editor(s) disclaim responsibility for any injury to people or property resulting from any ideas, methods, instructions or products referred to in the content.

About volume

Volume title: Proceedings of the 7th International Conference on Economic Management and Green Development

ISBN：978-1-83558-099-8(Print) / 978-1-83558-100-1(Online)
Editor：Canh Thien Dang
Conference website: https://www.icemgd.org/
Conference date: 6 August 2023
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.39
ISSN：2754-1169(Print) / 2754-1177(Online)

© 2024 by the author(s). Licensee EWA Publishing, Oxford, UK. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license. Authors who publish this series agree to the following terms:
1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this series.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this series.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See Open access policy for details).

References

[1]. Francis, N. S.: Price-Earnings Ratios. Financial Analysts Journal 16(4), 43-45 (1960).

[2]. 2.Park, S.: The Business Cycle, and Timing the Stock Market. Journal of Porfolio Management 47(8), 165-183 (2021).

[3]. Zhong, G. H.: Hang Seng Index Price-earnings Ratio Mean Regression Problem. Times Finance 681(35), 173-174 (2017).

[4]. Shen, P.: The P/E Ratio and Stock Market Performance. Economic Review 85(4), 23-36 (2000).

[5]. Ang, A., Bekaert, G.: Stock Return Predictability: Is It There?. The Review of Financial Studies 20(3), 651-707 (2007).

[6]. Kumar, P.: Impact of Earning Per Share and Price Earnings Ratio on Market Price of Share: A Study on Auto Sector in India. International Journal of Research 5(2), 113-118 (2017).

[7]. Wisniewski, T. P., Lightfoot, G., Lilley. S.: Speculating on presidential success: exploring the link between the price-earnings ratio and approval ratings. Journal of Economics and Finance 36, 106-122 (2012).

[8]. Yan, X., Yang, H., Hou, C., Zhang, S., Zhu, P.: Portfolio optimization by price-to-earnings ratio network analysis. International Journal of Mordern Physics B 36(19), 2250107 (2022).

[9]. Nathan, S., Sivakumar, K., Vijayakumar, J.: Returns to Trading Strategies Based on Price-to-Earnings and Price-to-Sales Ratios. The Journal of Investing 10(2), 17-28 (2001).

[10]. Saputra, F.: Analysis Effect Return on Assets (ROA), Return on Equity (ROE), and Price Earning Ratio (PER) on Stock Prices of Coal Companies in the Indonesia Stock Exchange (IDX) Period 2018-2021. Dinasti International Journal of Economics, Finance & Accounting 3(1), 82-94 (2022).

For authors
Guide for authors Policies for authors Aims and scope Subscription Open access policy
For editors
Policies for editors Editorial board
For reviewers
Policies for reviewers Privacy policy

Cookies are used by this site.
Copyright © 2024 EWA Publishing, its licensors, and contributors. All rights reserved, including text and data mining, AI training, and similar technologies.