In the past two days, some voices have come from the market: "A new index is coming!" "Skip 3,000 points directly, you will lose money" "Shanghai Composite Index is about to bid farewell to the stage"...
The source is Shanghai Securities The exchange issued an "Announcement on the Release of Real-time Quotations of the Shanghai Composite Total Return Index" on July 15. The announcement reads: In order to facilitate investors to observe the overall income of the Shanghai securities market, the Shanghai Stock Exchange and China Securities Index Co., Ltd. It was decided to officially release the real-time market conditions of the Shanghai Composite Total Return Index from July 29, 2024, and at the same time adjust the index code and abbreviation to "000888" and "SSE Return" respectively.
Indeed, the Shanghai Composite Return Index and the Shanghai Composite Index look very similar. But after carefully reading this announcement, you will find that everyone has a big misunderstanding about this "new index".
did not "deliberately skip 3,000 points"
In fact, the Shanghai Composite Total Return Index is not a new face. The index has been released as early as 2020. What will be released this time is the real-time market price of the Shanghai Composite Total Return Index.
Two announcements on the official website of the Shanghai Stock Exchange.
In other words, in the past, investors could only see the closing point of the index, but could not see the latest value, increase or decrease and other real-time market conditions. After July 29, these can be tracked in real time.
As for "deliberately skipping 3000 points", it is also a big misunderstanding. The Shanghai Composite Total Return Index takes July 21, 2020 as the base day, and the Shanghai Composite Index closing point of 3320.89 points on that day as the base point. On wind, we can see the historical trend of this index. Taking this year's situation as an example, the index hit a low of 2,951 on February 2 and a high of 3,412 on May 17. Naturally, there is no such thing as "deliberately skipping 3,000 points".
The index was at 2951 on February 2.
The index was at 3412 on May 17.
will not replace Shanghai Composite Index
Regarding some voices that "this index will replace the Shanghai Composite Index", it is indeed "overthinking".
In the capital market, there are actually many indexes. Ranked by size, there are SSE 50 Index, CSI 300 Index, CSI 500 Index, etc. In addition, there are theme indexes, style indexes, strategy indexes, etc., which all reflect the characteristics of a certain The overall price movement of a group of stocks with similar characteristics. Many of these indexes have points higher than 3,000 points.
But among these indexes, the Shanghai Composite Index (referred to as "Shanghai Composite Index") is the undisputed leader. This is the first index of the a-share market. From July 15, 1991 to the present, it has continuously reflected the overall price trend of all stocks on the Shanghai Stock Exchange. It is affectionately called the Shanghai Stock Index. Needless to say, it is representative. If you say that such a long-established and authoritative index has been replaced, many financial institutions linked to it may not agree.
Let’s go back to the Shanghai Composite Total Return Index. We can see that it is also one of many indexes. As a derivative index of the Shanghai Composite Index, the samples and weighting methods of the two are exactly the same, but the difference is that the former is more The latter has more dividend performance. Based on the Shanghai Composite Index, the SSE Composite Total Return Index includes sample dividends into index returns, reflecting the overall performance of companies listed on the Shanghai Stock Exchange after including dividend returns.
The relevant person in charge of China Securities Index Co., Ltd. once said that based on the different ways of handling sample cash dividends, stock indexes are generally divided into price indexes and total return indexes. The Shanghai Composite Index is a price index, and the Shanghai Composite Total Return Index is a total return index.
Specifically, the price index does not include sample cash dividends and only reflects the price performance of index samples; while the total return index includes sample cash dividends and reinvested income, comprehensively reflecting the index sample prices and cash dividend performance. When an index sample distributes dividends, the price index will naturally fall back on the ex-dividend date. However, the total return index takes into account the reinvestment income of dividends, and the index point will not naturally fall back.
As for why releases the Shanghai Composite Index Total Return Index, In fact, China Securities Index Co., Ltd. released the "Reporter's Questions About the Shanghai Composite Total Return Index" on September 18, 2020. The answer The key word is still "dividends".
China Securities Index Co., Ltd. stated that stock dividends are an important part of stock returns and one of the important indicators that reflect the operational stability of listed companies. The Shanghai Composite Index is a price index that reflects the overall stock price performance of listed companies on the Shanghai Stock Exchange, but does not reflect the dividends of listed companies. Internationally, when index compilation agencies release price indexes, they generally also release corresponding total return indices, such as the S&P 500 Total Return Index, so that investors can observe the market from more dimensions. In order to comprehensively reflect the overall performance of stock prices and dividends of listed companies on the Shanghai Stock Exchange and provide more dimensional market observation tools, the Shanghai Stock Exchange compiled and released the total return index corresponding to the Shanghai Composite Index, namely the Shanghai Composite Total Return Index.
Therefore, has had different market response priorities from the Shanghai Composite Index Total Return Index since its birth. Together, they provide investors with more dimensional market observation tools.
At the same time, it is not difficult to see from the answer of China Securities Index Co., Ltd. that the encouragement and emphasis on "dividends" has been written into the policy as early as four years ago. The announcement of real-time market conditions at this time not only allows investors to see the impact of dividend income at a glance, but also continues to encourage listed companies to increase dividends.
For a healthier market
In fact, the representativeness of the Shanghai Composite Index has also caused controversy.
Around 2020, some voices believed that the compilation method of the Shanghai Composite Index could no longer fully represent the rapidly developing stock market, and there were many calls from all walks of life for the revision of the Shanghai Composite Index compilation plan. Soon, the regulatory authorities revised the preparation plan for the first time when the Shanghai Composite Index was about to "enter 30 years old."
On July 22, 2020, the Shanghai Composite Index ushered in a revision of the compilation plan, including securities listed on the Science and Technology Innovation Board, further enhancing the representativeness of the Shanghai Composite Index.
The revision aims to more objectively and truly reflect the overall performance of listed companies on the Shanghai Stock Exchange. In addition to the inclusion of stocks on the Science and Technology Innovation Board, there are two main changes -
First, risk warning stocks (st, *st) will be eliminated. As of the end of May 2020, the Shanghai Composite Index sample included 85 risk warning stocks. Removing such stocks would have a small impact on the index itself, but it would be conducive to the survival of the fittest in the capital market.
Second, the revision will extend the time for new stocks to be included in the index, and adjust the time for new stocks to be included in the index from the current "11th trading day after listing" to "one year after listing." Delaying the time for new shares to be included will help enhance the stability of the Shanghai Composite Index and guide long-term rational investment. At the same time, considering that the time required for the price stabilization of large-market capitalization new stocks after listing is generally shorter than that of small-market capitalization new stocks, a rapid inclusion mechanism for large-market capitalization new stocks has been set up. The stocks ranking among the top 10 in the Shanghai stock market by daily average total market capitalization since their listing have been listed for 3 months. will be included later to ensure the representativeness of the Shanghai Composite Index.
This is a high-profile change. Many people in the industry have said that the revised Shanghai Composite Index can more truly reflect the long-term rapid growth of the Chinese economy and reflect the long-term value improvement of high-quality listed companies.
Of course, facing a developing capital market, multi-dimensional observation tools are indeed needed. Whether it is the previous revision of the Shanghai Composite Index compilation plan, the real-time market conditions released this time, or the continuously enriched index, the ultimate goal is to reflect the market more objectively and truly.
