Sino-Singapore Jingwei Client, July 22. According to the official website of the Shanghai Stock Exchange, on the 22nd, the Shanghai Stock Exchange and China Securities Index Co., Ltd. revised the Shanghai Composite Index compilation plan. At the same time, after the market closes on the 22nd, the historical quotations of the 50 component index of the Shanghai Stock Exchange Sci-tech Innovation Board will be released, and the real-time quotations will be officially released on July 23.

　　Data map. Photo by Sino-Singapore Jingwei

What does the revision involve?

　　The Shanghai Stock Exchange pointed out that the revision of the Shanghai Composite Index compilation plan has fully borrowed from the international index compilation and revision experience, based on the actual development of the domestic market, removing risk warning stocks, extending the time for new stocks to be included in the index, and including securities listed on the Science and Technology Innovation Board.

Why amended the Shanghai Composite Index compilation plan?

　　According to the Shanghai Stock Exchange, 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 Shanghai Composite Index compilation plan, and opinions such as "the Shanghai Composite Index is distorted" and "not fully reflecting the changes in market structure" have appeared frequently.

　　According to the Shanghai Stock Exchange, the implementation of the index preparation revision plan will further enhance the market representativeness and stability of the Shanghai Composite Index, enable the Shanghai Composite Index to more accurately represent the overall performance of the Shanghai market, and more fully reflect the changes in the Shanghai market structure, and provide investors with an opportunity to observe market operations, Wealth management provides a more ideal scale.

　　Yang Delong, chief economist of Qianhai Kaiyuan Fund, pointed out that the adjustment made by the Shanghai Stock Exchange to the compilation of the Shanghai Composite Index makes this index more reasonable and more reflective of the true market conditions, which also responds to some demands of the market. Of course, this adjustment is a fine-tuning and does not have much impact on the index, maintaining the continuity of the index.

Why eliminate risk warning stocks?

　　According to the Shanghai Stock Exchange, a risk warning system has been established in the capital market. Stocks subject to risk warnings have higher risks, and there are greater uncertainties in their fundamentals, and investment values ​​are affected, making it difficult to represent the mainstream situation of listed companies. Excluding stocks that have been subject to risk warnings will help the Shanghai Composite Index to better perform its investment function and better reflect the overall performance of listed companies on the Shanghai Stock Exchange.

　　According to Wind data, as of July 21, the Shanghai Stock Exchange had 99 stocks that warned of Shanghai stock market risks, with a total market value of over 281 billion yuan.

Why extend the time for new stocks to be included in the index?

　　The Shanghai Stock Exchange pointed out that there are relatively large fluctuations in the initial listing of new stocks in my country's securities market. From 2010 to 2019, the average stock price volatility within one year of listing of new stocks was 2.9 times that of the Shanghai Composite Index during the same period. The time for new stocks to be included was delayed and included in the index one year after the new stocks were listed, which is conducive to enhancing the stability of the Shanghai Composite Index. Guide long-term rational investment.

　　The Shanghai Stock Exchange also stated that considering that the time required to stabilize the price of new stocks with large market capitalization is generally shorter than that for new stocks with small market capitalization, it has set up a fast counting mechanism for new stocks with large market capitalization. It is included after 3 months to ensure the representativeness of the Shanghai Composite Index.

Why include Sci-tech Innovation Board securities in the sample space of the Shanghai Composite Index?

　　According to Wind data, as of July 21, 2020, there are 133 companies listed on the Science and Technology Innovation Board, with a total market value of about 2.8 trillion yuan.

　　The Shanghai Stock Exchange pointed out that the science and technology innovation board listed companies cover many technological innovation enterprises, and the inclusion of science and technology innovation board securities can not only increase the market representativeness of the SSE composite index, but also further increase the share of science and innovation emerging industry listed companies in the SSE composite index. Therefore, the Shanghai Composite Index better reflects the structural changes of the Shanghai stock market. Taking into account that the compilation and revision of the Shanghai Composite Index involves the adjustment of the time when new shares are included, the Sci-tech Innovation Board securities are included in the Shanghai Composite Index in accordance with the revised rules, which will help ensure the stability and continuity of the Shanghai Composite Index rules.

How to determine the Science and Technology 50 Index?

　　The Shanghai Stock Exchange pointed out that the SSE Science and Technology Innovation Board 50 Component Index is composed of 50 securities on the Shanghai Stock Exchange Science and Technology Innovation Board with large market capitalization and good liquidity, reflecting the overall performance of a group of science and technology innovation companies that are the most representative in the market. The index uses December 31, 2019 as the base date and 1000 points as the base point.

　　The Shanghai Stock Exchange stated that in terms of the timing of new stocks, in order to improve the accurate representation of the "Technology 50" index on the market, while also taking into account the development of customer perceptions, a two-stage approach is adopted: at this stage, newly listed securities on the Science and Technology Innovation Board are calculated after 6 months. Included in the sample space, when the number of securities listed for 12 months reaches 100 to 150, they will be adjusted to be included after 12 months of listing; at the same time, the average daily market capitalization since listing is ranked in the top 3 and top of the science and technology board market. Five-digit securities set differentiated crediting time.

　　According to the Shanghai Stock Exchange, in the sample selection method, after excluding the securities whose average daily trading value in the past year is in the bottom 10% of the sample space, select the top 50 securities with the highest average daily market value as the samples of the "Technology 50" index. While ensuring the liquidity of the sample, it achieves a good representation.

　　The Shanghai Stock Exchange also stated that in terms of sample adjustments, based on the principles of sample stability and dynamic tracking, a quarterly regular adjustment mechanism has been established to reflect market changes in a timely manner. The effective time of quarterly regular adjustments is the first of March, June, September and December of each year. On the next trading day on Friday, a certain buffer zone and adjustment ratio limit will be set to ensure the stability of the index and reduce the cost of tracking the index caused by frequent changes in the sample. In addition, a temporary adjustment mechanism has been set up for delisting and delisting risk warnings. (Zhongxin Jingwei APP)