What was discussed in the special consultation meeting before the reform of Shanghai Composite Index

 What was discussed in the special consultation meeting before the reform of Shanghai Composite Index

What are the discussions behind the index revision? The 21st century economic news reporter learned exclusively that the Shanghai Stock Exchange and China Securities Index Co., Ltd. respectively held on June 15 a special consultation meeting on the revision of the preparation plan of the Shanghai Composite Index, which was mainly attended by fund companies, insurance asset management, overseas index companies and other market institutions, as well as experts and scholars from universities and research institutions.

On the whole, the delegates at the meeting basically agreed that it is necessary to revise the Shanghai Composite Index preparation plan, so as to more accurately capture the performance of Shanghai stock market. In terms of specific measures, it is suggested to include science and technology innovation board securities, extend the time for new shares to be included, and eliminate st and * ST shares. There are still some differences in the way of adjusting weighting.

From the public voice of many previous experts, the discussion on how to optimize the Shanghai composite index mainly focuses on the company structure, the time of new shares, whether to exclude ST shares, index weighting, etc.

The reporter learned that the market institutions and experts and scholars at the meeting unanimously suggested that science and technology innovation board securities should be included in the Shanghai Composite Index.

At the same time, experts at the meeting generally agreed that the time for new shares to be included should be extended. For a period of time, due to the limited price issuance of new shares and the arrangement of the trading system of the up and down limit plate, the initial stage of new shares listing has the characteristics of continuous up and down and high volatility. Individual shares are included in the Shanghai Composite Index on the 11th trading day after listing, which is not conducive to the stability of the index. Most institutions think that the 6-12-month listing of new shares into the index is the right choice at this stage. In the future, with the promotion of registration system and related basic system reform, we can consider further fine-tuning.

With the coming out of the scheme, there is a final conclusion on the issue of when the new shares will be included.

The plan extends the time for new shares to be included in the Shanghai Composite Index to one year after listing. Considering that the time required for the price stability of new stocks with large market value is generally shorter than that of new stocks with small market value, in order to maintain the good representativeness of the Shanghai Composite Index, the new stocks with large market value ranking the top 10 in the Shanghai stock market in terms of the daily average market value since listing will be included after 3 months of listing.

In the aspect of excluding st, * ST and other stocks, there were some views that the Shanghai composite index is an index of all listed companies in the whole market, and there are a large number of listed companies with small profits or losses in this market, which should be reflected in the stock index.

However, at the above-mentioned meeting, most experts believed that it should be eliminated. On the one hand, there is a great risk in the stocks with risk warning, and the investment value is affected. Eliminating this kind of stocks is conducive to improving the index as a reference for investment decision-making; on the other hand, in view of the current delisting system of Chinas capital market is still in the process of perfection, and the poor stocks have not been fully cleared and delisted, eliminating this kind of stocks is helpful to transfer the idea of long-term rational investment.

Data shows that as of the end of May, the Shanghai composite index sample contained 85 stocks subject to risk warning, with a total weight of 0.6%. The Shanghai Stock Exchange said removing the stocks with risk warnings would not affect its composite index positioning.

Li Xunlei, chief economist of Zhongtai securities, who participated in the meeting, also told reporters, with the further promotion of the delisting system of a shares and the survival of the fittest, the withdrawal of poor performing shares may increase significantly. It is also necessary to exclude the stocks with greater delisting risk such as St from the index, so as to avoid the drag and distortion of the index caused by the delisted stocks.

The modification of weighting method should be carefully evaluated

The improvement of weighting method is also a hot topic in the revision of Shanghai Composite Index.

Some experts believe that the total equity weighting should be changed to the free circulation equity weighting, which is in line with the international mainstream index compilation practice, and more accurately reflects the real price game in the market, improves the investability of the Shanghai Composite Index, and more in line with the investment benchmark requirements.

Wang Zhaoyu, senior vice president of Research Department of CITIC Securities Research Institute, believes that changing the index weighting method can help to reflect the structural market situation and reduce the cognitive bias of investors. In the past, the market has been in a structural market. Due to the weighting of total equity, the weight of the Shanghai composite index is concentrated in individual industries such as finance and energy, forming a market phenomenon of individual stocks rising and index not rising, resulting in investors cognitive bias. Changing the index weighting method will make the weight of the Shanghai composite index more decentralized and more accurately reflect the real investment performance of the market, which will help to reflect the structural market situation.

However, some experts and scholars think that it is prudent to modify the weighting method. Considering historical consistency and comparability, it is suggested to observe and evaluate and advance step by step.

Changing the index weighting method has a great impact on the index, and the functional positioning of the index itself should be fully considered. The change of index weighting method from total equity weighting to free circulation equity weighting will lead to great changes in the equity of index sample, so the index function positioning should be fully considered. Huaxia Fund quantitative investment department head told reporters.

Source: Zhang Mei, editor in charge of 21st century economic report_ NF2100