Li Xunlei: we cant regard the index as a universal tool

category:Finance
 Li Xunlei: we cant regard the index as a universal tool


Li xunlei

The index should be continuous and reflect the future

On July 22, the Shanghai composite index was revised for the first time in 30 years. Why is the free floating equity weighted widely used in the global mainstream index not adopted? In theory, this scheme should be adopted because it will more truly reflect the stock price changes of the actual tradable shares in the market. But in fact, once through free circulation, the index will jump, and the historical continuity of the index will be problematic.

The Shanghai stock exchange adopts a seamless method to revise the index, which I think is an improvement. Newly listed securities ranked in the top 10 of the Shanghai stock market in terms of daily average market value are included in the index after three months of listing, and other newly listed securities are included in the index after one year of listing. Although the function of this regulation has not been reflected yet, it is reasonable. In the past, the reason why the performance of the Shanghai composite index was relatively poor was that it was dragged down by the stock price of the new stock index. After the revision, this situation will be improved and more reflect the future.

In the past, there were four distortions in the Shanghai Composite Index

1. The structure of listed companies and macroeconomic structure changes are not completely synchronized, the lack of high-quality emerging enterprises affects the representativeness of stock index;

2. Poor performance stocks have not been fully cleared and delisted, pulling down the overall stock index point;

3. The time for new shares to be included in the index is unreasonable. The highest price of individual stocks on the 11th trading day after listing is included in the Shanghai Composite Index, and then it enters a long bear path of decline, which has a significant drag on the index;

4. There are problems with the weighting method. The proportion of free circulation of some large market value listed companies in Chinas A-share market is very small, some even less than 10%, which leads to a large deviation between the Shanghai Composite Index and other series of Shanghai stock index weighted by free circulation share capital.

It needs to be clear that the impact of the stock market index is not realized through the correction of the index, or depends on the fluctuation of the stock price and the fundamentals of listed companies. If the fundamentals continue to improve, the rise of the index should be realized.

Generally speaking, the revision of Shanghai stock index has little impact on the market. Because the market will not be controlled by an index, the index is only a calculation method. The change of calculation method will have a certain impact on the market, investors and investment behavior, but the impact is not great. We can not regard the index as a universal tool. The market goes up when it rises and falls when it falls. It has nothing to do with the index and the calculation method of the index. Even if there is an impact, it also has an impact on investors expectations. For example, if the overall strength of the science and technology innovation board is included in the index, it is also conducive to the rise of the index. On the other hand, removing problematic companies from the index will also have an impact on the behavior of investors. This also reflects the attitude of index compilers, which will have a positive effect on value investment and rational investment.

It is very difficult to change the problem of the high proportion of traditional industries in finance through this amendment, because the proportion of traditional industries is relatively large, it is difficult to change this situation by adjusting the index calculation method once, which needs enough time. The market structure has been formed for a long time. The proportion of emerging industries in Chinas economy is less than 20%. In fact, the A-share market is the same. The proportion of emerging industries is not high, but its growth is relatively good. Therefore, in the short term, emerging industries have little impact on the index at this stage. In the future, with the listing of some big Mac companies in emerging industries, it will have a more significant impact on the index. In addition to the revision of the Shanghai stock index, on July 22, the first anniversary of the opening of the science and technology innovation board, the ban on the science and Technology Innovation Board of 180 billion yuan was lifted. This is also a good thing, which means that the market capacity is further expanded, and the expansion of the market capacity for investors can have more choices.

This article is the exclusive contribution of Netease Research Bureau and does not constitute investment decision.

Netease Research Bureau is a financial and professional think tank created by Netease News. It integrates the original multimedia matrix of NetEase Finance and economics, relies on the wisdom of hundreds of top economists at home and abroad, conducts rational and objective analysis and interpretation on hot topics of economics, and creates a leading financial think tank with attitude. Welcome to contribute (contribution email: [email protected] uff09u3002

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