HXC Trading: Nasdaq Golden Dragon China Index Explained

Among the world’s biggest economies, the U.S. and China are long-standing rivals who have made headlines in the past couple of years, especially as the U.S.- SINO trade war intensified through bans and levies on AI chips, cars, and other imports (particularly under President Donald Trump’s administration).

Still, amidst the competition between the US and China, the Nasdaq Golden Dragon China Index (HXC) exists, an index that merges these two economic giants. This index represents a stock market measure that might surprise many.

Let’s explore it:

TL;DR

• The Nasdaq Golden Dragon China Index (HXC) monitors U.S.-listed firms that primarily operate in China.
• Companies like Alibaba, Baidu, and NIO are in the HXC.
• This index provides access to Chinese growth, U.S. regulatory standards, and broad sector diversification.
• The index can be traded with Plus500’s Contracts for Difference (CFDs)

What Is the Nasdaq Golden Dragon China (HXC)?

Launched in 2003, the Nasdaq Golden Dragon China (HXC) is a stock market index measuring 68* publicly traded companies from the U.S. that primarily conduct their business in the People’s Republic of China (PRC).

Offering access to exclusive Chinese market prospects, the Golden Dragon China Index enables trading in US-regulated companies, guaranteeing transparency for traders.

How Is the HXC Measured?

The Nasdaq Golden Dragon China Index (HXC) is a modified market capitalisation-weighted index designed to track the performance of U.S.-listed Chinese companies. Its structure and methodology ensure regular updates, risk control, and broad exposure to eligible securities.

Index Calculation

• It is calculated on weekdays.
• It uses the last sale price of each constituent security.
• The index value is updated once per second during trading hours.

Weighting Methodology

• Securities in the Golden Dragon China Index are initially weighted by market capitalisation. This reflects each security's market cap in relation to the aggregate market cap of all index components. Each security's weight within the index is determined by its market capitalisation relative to the combined market capitalisation of all elements included in the Golden Dragon China Index.

A two-tiered adjustment process is implemented:

• Stage 1: No single security can weigh more than 8%.
• Stage 2: The five largest companies (by market cap) retain their Stage 1 weights; all other constituents are capped at 4%

Eligibility Criteria

• Includes only U.S.-listed:
  • Common stocks
  • Ordinary shares
  • ADRs or equivalent securities
• Only businesses headquartered or officially based in Mainland China are eligible.
• Minimum market capitalisation: $100 million.

Index Maintenance

• No constituents are added or removed between rebalancing periods unless a company becomes ineligible due to events like bankruptcy, delisting, or mergers.

HXC Stocks

• ALIBABA GROUP HL LTD
• BAIDU, INC
• BILIBILI INC. ADS
• CANADIAN SOLAR INC.
• DADA NEXUS LTD ADS
• FULL TRUCK ALLIANCE
• HUYA INC ADS
• IQIYI, INC. ADS
• JD.COM, INC. ADS
• JINKOSOLAR HOLDING C
• KINGSOFT CLD HLD ADS
• LI AUTO INC. ADS
• LUFAX HOLDING LTD
• NEW ORIENTAL EDUCATION
• NIO INC ADS
• RLX TECHNOLOGY ADS
• TAL EDUCATION GROUP
• TENCENT MUSIC ADS
• WEIBO CORP. ADS
• XPENG INC. ADS
• YUM CHINA HLDGS
• AGORA, INC. ADS
• ATOUR LIFESTYLE ADS
• ATRENEW INC.
• AUTOHOME INC.
• BAOZUN INC. ADS
• BGM GROUP CL A SHS
• CANGO INC. ADS
• DAQO NEW ENERGY CP
• DINGDONG (CAYMAN) LI
• DOGNESS (INTL) CP
• DOUYU INTL HLDGS ADS
• ECARX HOLDINGS INC.
• EHANG HOLDINGS LIMIT
• FINVOLUTION GROUP
• GAOTU TECHEDU INC.
• GDS HOLDING LIMTD CM
• H WOLRD GRP LTD ADS
• HELLO GROUP ADS
• HESAI GROUP ADS
• JAYUD GLOBAL CL A OS
• JIAYIN GROUP INC ADS
• JIN MED INTL LTD OS
• KANZHUN LIMITED
• KE HOLDINGS INC
• LEXINFINTECH HOLDING
• MERCURITY FNTH ORD
• MINISO GROUP HOLDING
• NETEASE INC ADS
• NIU TECHNOLOGIES ADS
• NOAH HLDGS LTD ADS
• QIFU TECHNOLOGY, INC
• QUDIAN INC.
• SOHU.COM LIMITED ADS
• SUNCAR TECH GP OR A
• TUYA INC. ADS
• UP FINTECH HOLD ADS
• VIPSHOP HOLDINGS LTD
• VNET GROUP, INC.
• XUNLEI LIMITED ADS
• YATSEN HOLDING LIMIT
• YIREN DIGITAL LTD.
• YOUDAO, INC.
• ZAI LAB LTD ADS
• ZEEKR INTELLIGENT TE
• ZHIHU INC.
• ZJK INDUSTRIAL CO OS
• ZTO EXPRESS (CAYMAN)

HXC Market Sectors

Companies listed on the HXC can belong to the following sectors:

• Basic materials
• Energy
• Consumer discretionary
• Consumer staples
• Health care
• Financials
• Industrials
• Real estate
• Technology

Why Trade the Nasdaq Golden Dragon China (HXC)

Tap into China’s Growth Potential with U.S.-Listed Access

The HXC Index offers investors a strategic gateway to China’s economic growth by providing exposure to leading Chinese companies listed on U.S. exchanges. This structure enables participation in China’s dynamic markets while benefiting from the regulatory safeguards and transparency associated with U.S. financial markets, without the intricacies of investing directly in mainland Chinese stocks.

Enhanced Transparency and Regulatory Standards

All constituents of the HXC Index are traded on prominent U.S. exchanges, including Nasdaq, NYSE, NYSE American, and Cboe BZX. As a result, these companies adhere to U.S. disclosure and corporate governance requirements, offering investors a higher level of transparency and regulatory oversight compared to local Chinese markets.

Broad Diversification Across China’s Market Leaders

The index comprises a diversified portfolio of top-tier Chinese companies such as Alibaba, JD.com, Baidu, and Li Auto. This diversification spans key sectors like technology, e-commerce, and consumer services, helping to reduce company-specific risk and provide balanced exposure to China’s evolving economy.

High Liquidity and Investment Accessibility

HXC-related investment products, such as the Invesco Golden Dragon China ETF (PGJ), are listed and traded on U.S. exchanges, delivering convenient access and robust liquidity. This makes it easier for investors to gain exposure compared to navigating the complexities of Chinese A-shares or Hong Kong-listed securities.

Volatility as a Source of Opportunity

U.S.-listed Chinese equities are known for their price volatility, which can create tactical trading opportunities for risk-tolerant investors. The HXC Index reflects this market dynamic, often reacting sharply to shifts in regulatory policy, economic data, or global investor sentiment.

Quarterly Index Maintenance

The index is reviewed and rebalanced on a quarterly basis to ensure it remains aligned with market trends and continues to reflect the most relevant and investable U.S.-listed Chinese companies.

Currency and Exchange Risk Management

Certain HXC-linked products offer currency-hedged options, helping investors reduce the impact of exchange rate fluctuations between the U.S. dollar and the Chinese yuan.

How to Trade the HXC Index

Trading the HXC index can be done with Plus500’s Contracts for Difference (CFDs), giving you access to both long and short positions on this stock index without granting you ownership of it.

In addition, HXC CFDs are leveraged, which can increase the gains and losses depending on your position.

Conclusion

In conclusion, the Nasdaq Golden Dragon China Index (HXC) serves as a unique financial bridge between the U.S. and China, two of the world’s largest and most influential economies.

Despite ongoing geopolitical tensions, this index offers investors a compelling opportunity to tap into China’s growth through U.S.-listed companies. With its transparent structure, sector diversification, and regular rebalancing, the HXC provides both long-term exposure and short-term trading potential.

The HXC is a powerful and strategic tool for investors seeking an accessible route to China’s dynamic markets.

Ready to trade the HXC Index CFD with Plus500? Start now!