The other side of Shanghai indexs distortion: the journey of fat before high

category:Finance
 The other side of Shanghai indexs distortion: the journey of fat before high


Shanghai index is fat before high

If the stock market is a barometer of the economy, the index is like a thermometer with a scale. Statistics show that since the post global financial crisis, Chinas economic scale has grown rapidly, and its nominal GDP in 2019 has been 2.8 times of that in 2009. Meanwhile, the adjustment of the real economic structure has achieved remarkable results. Consumption alternative investment has become a new engine of economic growth, and the transformation of new and old driving forces has been accelerating. However, these changes in the real economy are in contrast to the performance of the Shanghai Composite Index over the same period. Based on this, it is believed that the compilation of Shanghai Stock Exchange index does not reflect the contribution of core index enterprises to economic growth, nor does it really reflect the achievements of economic development in recent years.

The distortion of Shanghai stock index caused by capital circle is a real problem. Li Yi (pseudonym), head of Beijing jinchangchuan capital, told the securities times, the distortion of the index will not only weaken its value as a market standard, but also affect those institutions and individual investors who track the index to determine the investment direction or make trading strategies based on the index trend. Index distortion tends to push up the cost of index tracking, reduce the influence of index in the field of index funds, resulting in a significant decline in the number of funds tracking the Shanghai Composite Index in the market.

In addition, the comparison of index distortion in the international market will bring troubles. For example, in the context that the Shanghai stock index cannot reflect the results of Chinas real economic growth and structural changes, it often leads to the distortion of the ah premium index. Li Yi said.

However, some people do not agree with this view, and think that the Shanghai index distortion judgment, to some extent, is also due to the misuse of market tools.

Zhou Maohua, Macro Analyst of financial market department of China Everbright Bank, told the securities times, in the world, Shanghai stock index is generally regarded as representing Chinas stock market, which is a synonym for the development of Chinas securities market. In this position, the Shanghai stock index has not risen for ten years, which is more obvious compared with the US stock market, which has reached a new high in recent years. But this positioning is not entirely accurate.

Zhou Maohua believes that the Shanghai stock index more reflects the ups and downs of A-share traditional big block. On the one hand, some traditional cyclical stocks are issued at a high price. For many years, most of the top technology companies have no access to A-share. This alone causes the overall Shanghai stock index to reflect the industry cycle of traditional cyclical companies. On the other hand, if the performance of cyclical stocks such as financial and real estate is excluded, the performance of the vast majority of stocks is remarkable, and the continuous rise of big consumption and other indexes is a typical example.

Zhou Maohua provided reporters with a set of data. By comparison, Chinas GDP exceeded 10 trillion yuan in 2000, and reached 99 trillion yuan in 2019. The total market value of Shanghai Stock Exchange in 2000 was about 3 trillion yuan, and reached 35 trillion yuan by the end of 2019. The growth rate of the two is comparable. Therefore, although a share has not yet grow high, it has undoubtedly become fat.

According to Zhou Maohua, in order to reduce the impact of index distortion on decision-making, investors can refer to other indexes such as A-share, all index and CSI 300 to comprehensively verify the stock price performance of large and medium-sized companies with market value in Chinas A-share market. From the analysis and comparison of major indexes, it is necessary to study the trend of Shanghai stock index to carry out the long-term investment layout and whether the long-term investment opportunities come. This role of Shanghai stock index can be said to be irreplaceable.

Market self correction

But in the view of some insiders, although it seems that there is no knife, with the deepening of Chinas capital market reform, the self correction of Shanghai stock index has been surging.

For example, there is a short coverage, which is regarded as one of the important reasons for the distortion of Shanghai stock index. Li Yi said, the S & P 500, Nikkei 225, and CSI 300 indexes are all compiled on a selective basis with limited sample size, and the component stocks are updated regularly. The index performed better as underperforming stocks were regularly transferred out. However, the mechanism of survival of the fittest in Chinas stock market is not perfect, and listed companies rarely withdraw from the market. For example, St stocks still stay in the stock market, resulting in relatively weak performance of the Shanghai stock index.

The industry calls this phenomenon survivor bias. Li Xunlei, chief economist of Zhongtai securities, pointed out that with the change of enterprise life cycle, the number of medium and small profit or loss enterprises in listed companies increased, and the underperforming shares were not fully cleared and delisted, which lowered the overall stock index. He suggested that in the index compilation method, it is advisable to take the growing component stocks as the target, cover the representative enterprises, and adjust every year according to the growth of individual stocks, timely remove or even delisting junk stocks.

Zhou Maohua believes that with the implementation of the registration system and the promotion of the delisting system reform, this obstacle is expected to be resolved, and the weapon to resolve it is the acceleration of a share metabolism.

Take June 5 as an example, LETV and other three stocks entered the delisting consolidation period. Since this year, 7 listed companies have been forced to delist, and 11 listed companies have been delisted through liquidation restructuring. In less than half a year, the number of listed companies determined to delist in the capital market has been the same as that in the whole year of last year, the delisting efficiency has been greatly improved, and a diversified and normalized delisting pattern has been gradually formed.

At the same time, the reporter also noted that not all industry insiders agree that the Shanghai stock index is necessary to correct the survivor deviation. Wu chaoming, chief economist of Caixin securities, does not recommend excluding B shares and ST shares with poor liquidity.

The purpose of discussing the establishment of the Shanghai composite index is to make the index better represent the real economy, Wu said. In the real economy, there are listed companies with good profitability, and there are also poor ones. If the poor ones are eliminated for the reasons of large stock price fluctuation and poor liquidity, the ST shares will be actively filtered out, and there is suspicion of stealing the truth. The screening task can be completely realized by the component index.

Another important reason for the index distortion of Shanghai stock exchange lies in the indexs inclusion of high access. According to the Shanghai stock index, new shares are included in the index on the 11th trading day of listing. According to Li Xunlei, after the highest point is included in the Shanghai Composite Index, the index has been dragged down by a long bear path.

This defect also exists in other domestic indexes such as Shenzhen stock index, Zhou Maohua told reporters. However, with the promotion of IPO reform, the relevant constraints are expected to be resolved.

In addition, financial stocks account for a relatively high proportion, and other factors such as weighting by market value are also considered as an important incentive for the distortion of Shanghai stock index. Ji Peng, assistant general manager and fund manager of domestic investment department of Huabao fund, pointed out that it is possible to increase the proportion of re economy, reduce the proportion of periodic shares such as financial real estate, use free circulation market value weighting for index compilation, or give upper limit to single market value and plate weight, and reduce the problem of too high proportion of single stock.

At this years two sessions, some members proposed to adjust the compilation method of the Shanghai Composite Index and improve the indexs representational function. This has also pushed the distortion of Shanghai stock index to the forefront of public opinion again.

Some insiders admitted to reporters that although there are expectations in the industry for the revision of index characterization function, many problems will inevitably be faced during this period.

One of the difficulties is that if the coverage of the Shanghai composite index changes from the whole market to a limited sample, it will greatly change the way the Shanghai composite index is compiled and affect the continuity of the Shanghai Composite Index. At the same time, behind the index is a huge amount of capital, which is easily changed, and has a great impact on the specific implementation and listed companies. Therefore, there is also a view that whether or not the Shanghai composite index needs and allows such a huge adjustment, it also needs to be prudent, comprehensive and balanced in all aspects of factors and interests.

In addition, the representational significance of Shanghai stock index is also considered questionable by some market participants. From the current point of view, banks do account for most of the listed profits, but the valuation is the lowest. Although this situation is not comprehensive, it objectively reflects part of the reality. At the same time, although the proportion of financial real estate is high, it actually reflects part of our economic structure and the real profits of listed companies. So, to a large extent, its not the index itself, its the structure of Chinas economy. Li Yi pointed out. Even if the Shanghai stock index is adjusted, can most investors make money? The industry is sceptical. Zhou Maohua believes that from a global perspective, whether investors make money or not is not positively related to the index. The current capital market reform has entered a critical period of in-depth promotion, and the correction of Shanghai Stock Index distortion will become more and more a system engineering . The establishment of Shanghai stock index needs to be optimized, but more importantly, the establishment of a good listing system and market ecology, especially the improvement of the quality of listed companies, and the effective protection of the rights and interests of small and medium-sized investors. In this way, the vision of coordinated development of investment and financing functions of A-share market can be realized. Source: Yang Qian, editor in charge of Securities Times_ NF4425

In addition, the representational significance of Shanghai stock index is also considered questionable by some market participants. From the current point of view, banks do account for most of the listed profits, but the valuation is the lowest. Although this situation is not comprehensive, it objectively reflects part of the reality. At the same time, although the proportion of financial real estate is high, it actually reflects part of our economic structure and the real profits of listed companies. So, to a large extent, its not the index itself, its the structure of Chinas economy. Li Yi pointed out.

Even if the Shanghai stock index is adjusted, can most investors make money? The industry is sceptical. Zhou Maohua believes that from a global perspective, whether investors make money or not is not positively related to the index. The current capital market reform has entered a critical period of in-depth promotion, and the correction of Shanghai Stock Index distortion will become more and more a system engineering . The establishment of Shanghai stock index needs to be optimized, but more importantly, the establishment of a good listing system and market ecology, especially the improvement of the quality of listed companies, and the effective protection of the rights and interests of small and medium-sized investors. In this way, the vision of coordinated development of investment and financing functions of A-share market can be realized.