Shanghai Stock Index Returns To Its Original Point In Ten Years? The Reform Of The Compilation Method Of The Two Sessions' Representatives

In May 27th, the Shanghai Composite Index closed at 2836.8, which has been hovering around 2800. In the long period of time, the 2800 point of the Shanghai Composite Index has been reached as early as 2007.

At the recent two sessions of the National People's Congress, relevant representatives and members put forward views and suggestions on this issue. The key problem mentioned by the industry repeatedly is that China's delisting system is not perfect, which has become the key to curb the rise of Shanghai Composite Index.

Member of the CPPCC National Committee and executive director of the Shanghai High School of finance, Shanghai Jiaotong University, Tu Guang - Su, who interviewed exclusively in the twenty-first Century economic report, said that the current market's discussion on the main index lies in the question of "comparative index". But there are still some voices that directly bind the index rise to the investors' money making effect, which are the two concepts that need to be differentiated.

Why is it distorted?

Zhu Jiandi, chairman of the National People's Congress and chairman of Li Xin accounting firm, said in a media interview in May 25th that there were three main reasons for the long-term failure of the Shanghai Composite Index.

First, when the new shares are included in the index, it has not yet been fully played, and the price stability is poor. At the beginning of the Shanghai Composite Index, it was only 1 months after the IPO was included in the index. Since then, the relevant departments have made 3 adjustments: in November 9, 1999, the new stock index was adjusted to the second trading day of the listing; in September 23, 2002, the new share index was adjusted to the first day of listing; in January 6, 2007, the new share index was adjusted to the eleventh Trading day of the index.

However, since 2014, affected by the institutional changes such as the pricing of new shares and the first day of listing, the average price of new shares has been pulled out after the IPO. When the Shanghai composite index is listed, the price of new shares is generally at a high level. After the price of new shares returns, the Shanghai Composite Index will be affected by the 9 return.

Second, the deterioration of the fundamentals has not been eliminated, which has affected the representativeness of the index.

Third, the weighted total equity is not conducive to the true reflection of the overall changes in stock prices, weakening the representation of the index.

"At present, the share of free circulation shares in Shanghai stock market is only about 40%, of which the proportion of banks, energy and other heavyweight shares is lower. A large number of non free tradable shares, though not involved in the transaction, have a greater impact on the Shanghai Composite Index, which results in a certain departure from the performance of the Shanghai Composite Index. Zhu Jiandi said.

Tu's view is more straightforward. He told the twenty-first Century economic news reporter that the direct reason for the rise of the Shanghai composite index was the imperfection of the delisting system. Meanwhile, some listed companies had whitewashed their financial behavior in the past, making the "beginning of the listing" become the highlight of their performance. After that, their performance fell all the way, and they had a long-term dropout on the main index.

First, the delisting mechanism of China's stock market is not smooth. Listed companies can't get in or out, which leads to problems in the structure of listed companies. This makes some bad companies, companies that should be eliminated, still keep. But the Shanghai composite index is also a composite index, and those poor companies have been weighted all the time, resulting in an exponential failure.

Second, the structure of Listed Companies in the Shanghai composite index needs to be further improved. Since the establishment of China's capital market, the domestic economic structure and industrial structure have been changing and adjusting. However, the structure of Chinese listed companies is still dominated by traditional industries, which means that innovative enterprises that can reflect new kinetic energy, such as technological innovation and business innovation, are still in the structure of the whole listed companies. It's very low. For example, at present, the top 10 listed companies in the A market share a large proportion of traditional industries.

From the perspective of listed companies, through listing, better resources, including raising funds, can achieve faster growth. But because of our past listing conditions, the high growth of some enterprises can not be reflected in the stock market, which also restricts the rise of the index.

Third, related to the domestic listing system.

"Over the past 30 years, there have been many companies that, in order to meet the performance requirements of IPO, will perform some performance packages, or even whitewash them, so as to meet the listing standards. After the listing, the company itself lacks the subsequent profitability, so there will be performance changes, when the listing is very good, second years will not work, to third years or even a loss. This phenomenon was once universal. " Tu said that after the listing of such companies, the growth will be bad and the index will not go up. Even on the day of the listing, the stock price reached its peak. Some companies listed on the day of listing were the highest. The comprehensive reasons for these aspects make the index never rise.

In addition, the comparison of indices is comparable.

"We generally talk about the composite index, but the international index is mainly based on the sample index. The bigger the sample, the slower the US index. For example, the Dow Jones index, which contains a small number of companies, and constantly adjusted, this index is rising very quickly, but for example, the S & P 500 has gone up relatively slowly. Tu Guang said.

However, Tu said that although the index did not rise, it did not mean that the people did not make money, and the market often confused the two concepts.

Despite all these factors, Tu also pointed out that the fundamental problem of China's stock market is the quality problem of listed companies. The index is the external manifestation of deep-seated problems. In order to enhance the function of capital market, we must deepen reform through registration system and science creation board.

How to optimize?

Li Xunlei, chief economist of China and Thailand securities, issued an appeal in May 25th, calling for full attention to the distortion of stock index.

Li Xunlei said that the problem of stock index distortion is not a new problem. Since 2006, "stock index distortion" has become a well known term in the market. For A share investors, a question that may often be puzzled is why the Shanghai stock index does not fully reflect the sustained high growth of China's economy. China's economy has achieved a high growth rate of thirty or forty years. In 2000, China's GDP exceeded 10 trillion yuan and reached 99 trillion yuan in 2019. The Shanghai Composite Index has reached 2000 points in 2000. Why did it not break through 3000 points in 2020, and the contrast between 10 times of GDP and 50% of the stock index is quite small.

Li Xunlei put forward 4 suggestions on how to optimize the preparation of Shanghai stock index.

First, about the company structure. Since the KSCC is the market segment of the Shanghai Stock Exchange, the company is included in the Shanghai Composite Index.

Second, about junk stocks. Such companies are difficult to represent the overall situation of listed companies, and their stock price volatility and liquidity are not always consistent with the trading standards of institutional investors such as public funds. Considering that the market share of such shares is very low, their impact on index and market is very small, so the dispute is also low. Therefore, ST stocks should be eliminated from the index as early as possible.

Third, the time for new shares to be included in the index. The European STOXX 50 index adjustment in 2013 and the adjustment of the S & P index in 2017 have mature experience in optimizing the timing of new shares. We can learn from domestic and international experience and make new adjustments as soon as possible.

Fourth, about weighting. Judging from the overseas situation, the United States's S & P, Hongkong Hengsheng, Japan's TOPIX total capital stock is weighted to free flow of capital stock, the Shanghai composite index can be learned and promoted at an early date.

(author: Southern finance and Economics National two sessions report group Wang Yuanyuan)

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