Asian Stock Indexes Explained: Nikkei, Hang Seng, KOSPI and Sensex

When the news says Asian markets rose or fell, it usually means a stock index moved. An index tracks a basket of stocks as a single number, and each one is built in a different way.

This guide explains the main Asian indexes, how they are calculated, and why they sometimes move together and sometimes apart. For how Japan’s central bank moves the Nikkei, see our guide on how Bank of Japan rate hikes affect the yen and Nikkei 225.

What a Stock Index Measures

A basket of stocks: The index combines many share prices into one number that shows the direction of a market.
Weighting: It decides which companies matter most. The two common methods are price weighting and market value weighting.
Free float: Many indexes count only the shares available for public trading, so locked in holdings do not distort the weights.
Why it matters: Two indexes in the same country can tell different stories, so know the method before reading the headline.

Nikkei 225 (Japan)

What it is: A price weighted average of 225 companies on the Tokyo Stock Exchange, first published in 1949.
How it works: The Japan Exchange Group explains that the value equals the sum of component stock prices divided by a constant.
The effect: A stock with a high share price moves the index more than a low priced one, whatever the company’s size.
The alternative: TOPIX is a free float adjusted market value index that covers a wide range of Japanese stocks, so compare the two.
Sensitivity: The yen and Bank of Japan decisions often shape the Nikkei’s moves.

Hang Seng Index (Hong Kong)

What it is: A free float market value index of the largest companies on the Hong Kong exchange, launched in 1969.
Why it matters: It serves as a bridge between Chinese companies and international capital.
How it differs: It is weighted by company value, so the biggest firms carry the most influence.

KOSPI (South Korea)

What it is: A market value weighted index of companies on Korea’s main stock market.
What to know: A handful of large exporters, especially chipmakers, carry a lot of weight, so global technology demand can move the whole index.
How to read it: Check the top holdings before assuming a move reflects the whole economy.

Sensex and Nifty 50 (India)

Sensex: A free float market value index of 30 established companies on the Bombay Stock Exchange, launched in 1986.
Nifty 50: The National Stock Exchange’s main index. Like the Sensex, it is built on market value.
Narrow base: With only 30 or 50 stocks, a few sectors can sway the result.

Other Indexes Worth Knowing

Straits Times Index: Tracks 30 large companies on the Singapore Exchange.
Shanghai Composite: Reflects mainland China and is less tied to global markets because of capital controls.
S&P/ASX 200: Covers the 200 largest stocks in Australia and uses a free float method.

Why Asian Indexes Move Together and Apart

Together in shocks: On August 5, 2024, the Nikkei fell 12.4%, the KOSPI fell 8.8% and Taiwan’s Taiex fell 8.4%, according to Business Insider and Asia Fund Managers.
Apart in normal times: Currencies, central banks and sector mix differ from market to market.
Time zones: Asian markets open before Europe and the US, so overnight Wall Street moves often set the tone.
Method gaps: A price weighted index and a market value index can diverge even within one country.

How to Use Indexes as an Investor

As a benchmark: Compare your holdings with the index that matches your market.
As a mood gauge: An index shows what has happened, not what comes next.
Through funds: You cannot buy an index directly, but many ETFs track them. Check the method and fees first.
Before judging a move: Look at the largest weights, since a few stocks can drive the result.

The Takeaway

Asian indexes are not interchangeable. The Nikkei is price weighted, while the Hang Seng, KOSPI and Sensex are weighted by company value, and each leans on different sectors. Learn how an index is built before you read its daily moves, and compare it with local factors such as the currency and the central bank.

Japan Exchange Group, Business Insider, Asia Fund Managers, Bajaj Finserv, Fiveable. This article is for education only and is not financial advice. For more