As the first stock index in the A-share market, the Shanghai Composite Index will be greatly optimized on July 22nd. The revised preparation plan will exclude risk warning stocks, extend the time for new shares to be included, and include them in science and technology innovation board listed securities.
Perfecting the index compilation scheme is the common practice of the international mainstream index. This revision of the Shanghai Composite Index fully draws lessons from the experience of international index revision, based on the actual development of the domestic market, eliminating risk warning stocks, extending the time for new shares to be included in the index, and including science and technology innovation board listed securities, which is conducive to the Shanghai Composite Index reflecting the overall performance of listed companies in Shanghai more objectively and truly.
Specifically, if the index sample is subject to risk warning, it will be excluded from the index sample from the next trading day on the second Friday of the month after the risk warning measures are implemented. Securities whose risk warning measures have been revoked shall be included in the index from the next trading day on the second Friday of the month after the risk warning measures have been revoked. The newly listed securities with the daily average total market value ranking in the top 10 in Shanghai Stock Exchange will be included in the index after three months of listing, and other newly listed securities will be included in the index after one year of listing. Depositary Receipts issued by red-chip enterprises listed on the Shanghai Stock Exchange and science and technology innovation board listed securities will be included in the Shanghai Composite Index according to the revised compilation plan.
It is necessary to revise the Shanghai Composite Index. A spokesperson for the Shanghai Stock Exchange said that the Shanghai Composite Index was released in 1991 and is the first stock index in the A-share market. The core compilation method is still in use today. In recent years, there have been many calls from all walks of life for the revision of the compilation scheme of the Shanghai Composite Index, and opinions such as "distortion of the Shanghai Composite Index" and "failure to fully reflect changes in the market structure" have frequently appeared. During the two sessions of the National People’s Congress this year, market professionals, including deputies, once again proposed to improve the compilation method of the Shanghai Composite Index.
According to Zhang Qiang, CEO of Huiyan Huiyu Asset Management Company, the Shanghai Composite Index has been running for nearly 30 years since its release. With the increasing number of listed companies, the original index compilation method makes the index more and more distorted, making it difficult to express the correlation between the capital market and the macro economy. The setting of the index is to better reflect the changes in the financial market environment, and the more it can reflect the market situation, the greater the significance to investors; Only by symbolizing the market can we better serve the financial market. In order to enhance the symbolic significance of the index to the market and better serve investors, it is imperative to revise the Shanghai Composite Index.
It is worth noting that this revision of the Shanghai Composite Index excludes stocks with risk warnings (ST, *ST), which will not affect the positioning of the composite index.
China’s capital market has established a risk warning system, and the stocks that are subject to risk warning have high risks, great uncertainty in fundamentals, and the investment value is affected, which is difficult to represent the mainstream situation of listed companies. Excluding the stocks with risk warning will help the Shanghai Composite Index to better play its investment function and better reflect the overall performance of listed companies in Shanghai.
"The sample range of many major international composite indexes only includes the vast majority of stocks in the market. For example, the Nasdaq composite index excludes the stocks in the Nasdaq market as the second listing place, and the STOXX European Total Market Index and Hang Seng Composite Index only cover stocks with a market value of 95%. By the end of May, the sample of Shanghai Composite Index included 85 stocks with risk warning, with a total weight of 0.6%. Therefore, eliminating the stocks that are subject to risk warning will not affect their comprehensive index positioning. " The Shanghai Stock Exchange said.
In addition, it is increasingly necessary to include science and technology innovation board securities in the sample space of Shanghai Composite Index.
Generally speaking, the securities listed in the new stock market usually need to be tracked and evaluated for a period of time before they are considered to be included in the market representative index. Since the listing of the first batch of science and technology innovation board Securities on July 22, 2019, the Shanghai Stock Exchange has been continuously tracking and evaluating for nearly one year, and the overall operation of science and technology innovation board is stable. By the end of May, there were 105 listed companies in science and technology innovation board with a total market value of 1.6 trillion yuan, which has become an important part of the Shanghai Stock Exchange. It is increasingly necessary for science and technology innovation board Securities to be included in the Shanghai Composite Index. The listed companies in science and technology innovation board cover many scientific and technological innovation enterprises. The inclusion of science and technology innovation board Securities will not only improve the market representation of the Shanghai Composite Index, but also further increase the proportion of listed companies in science and technology emerging industries in the Shanghai Composite Index, so that the Shanghai Composite Index can better reflect the structural changes in Shanghai. Considering that the revision of the Shanghai Composite Index involves the adjustment of the recording time of new shares, science and technology innovation board Securities will be included in the Shanghai Composite Index according to the revised rules, which is conducive to ensuring the stability and continuity of the Shanghai Composite Index rules.
Chen Li, director of Chuancai Securities Research Institute, said that the inclusion of listed companies in science and technology innovation board in the Shanghai Composite Index not only recognizes science and technology innovation board enterprises, but also makes the Shanghai Composite Index cover high-tech industrial companies representing China’s future, making the index more representative of China’s best and most promising enterprises.
The implementation of the revision of the Shanghai Composite Index is based on the adjustment of the international representative index, and it is planned to be carried out in a seamless way, that is, the effective date of the index preparation plan change is seamlessly connected with the previous trading day, and the real-time point on the effective date is calculated based on the closing point of the previous trading day and the rise and fall of the sample stocks on that day. "Therefore, the implementation of the revision of the Shanghai Composite Index will not affect the continuity of the index and will not affect investors’ observation of market conditions." A related person from the Shanghai Stock Exchange said. (Economic Daily China Economic Net reporter Wen Jicong)
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