The Timely Revision Of Yin Zhongli Column Index Compilation Method Opened The New Journey Of Shanghai Composite Index.

Yin Zhongli, chief economist of Rongsheng development, researcher at the Institute of finance, Chinese Academy of Social Sciences

Thirty years of standing is the same for a person's growth, and for the growth of a market. This year is the 30th anniversary founding of the new China stock market. Reflecting and summarizing thirty years of stock market operation experience and lessons, improving various basic systems can lay a good foundation for future capital market development. In the construction of a series of systems, the revision of Shanghai composite index is also an important part.

Shanghai composite index is an important reference system for stock market investors. It is not only a reference frame for investors' performance appraisal, but also a reference frame for judging market trends. From the two exchanges in Shanghai and Shenzhen, the major blue chips are in Shanghai stock market, and the market is accustomed to call Shanghai stock market the "main board market". Therefore, the Shanghai composite index represents China's stock market index to a certain extent. Without special explanation, the Chinese stock market index generally refers to the Shanghai Composite Index.

From the thirty years of market operation, we can see the shortcomings of the Shanghai Composite Index, especially when the economic structure is drastically adjusted. For example, in June 19th, the gem composite index has reached a new high of four years, while the Shanghai composite index is nearly 10% away from the high level at the beginning of this year. For example, the Shanghai composite index went to 2200 points in 2001, but after 20 years, it still lingers around 3000.

The index is a comprehensive reflection of the market. The Shanghai composite index reflects the problems and pressures existing in the adjustment and transformation of China's economic structure at this stage. The author tried to analyze the reasons why the Shanghai Composite Index failed to rise for many years by comparing the largest ten stocks in China and the US stock market. Among the ten most weighted stocks of the Shanghai Composite Index, seven stocks are lower than the current price at the beginning of the listing, and the seven stocks include ICBC and PetroChina, all listed in 2007. 2007 is the peak of China's traditional industries. Both the financial real estate industry and the resource and mineral industry have reached the best operating status, and of course, they are also the peak of profitability. At the same time, coupled with the optimism of the stock market in 2007, the valuation of these stocks is relatively high at the beginning, and it is inevitable that the share price will continue to fall after the listing. PetroChina's stock price is a typical example. In 2007, the opening price of China Petroleum shares on the first day was 48 yuan, while the current share price was only 4 yuan, and the 12 year time fell by more than 90%. PetroChina listed the world's largest market capitalization at the beginning of the year, more than 1 trillion dollars, and today it has a market value of only 100 billion dollars.

When the major heavyweights are in a state of decline, the Shanghai Composite Index will hardly rise. That is why China's total economic output has increased several times after 12 years, while the index is only half the highest in 2007. The present situation of the Shanghai composite index reflects the great changes of the economic structure to a certain extent.

The adjustment of economic structure is objective. The problem of index calculation method magnifies the impact of economic structural change on index to a certain extent. Among them, the most influential factor was the IPO listing which was soon included in the Shanghai Composite Index. There is speculation in China's stock market, and IPO pricing is often relatively high, and the IPO index is often a drag on the index. Therefore, one of the revisions to the Shanghai composite index is "delayed entry time", which is included in the index after 1 years of IPO, which is conducive to enhancing the stability of the Shanghai Composite Index and guiding long-term rational investment. At the same time, taking into account that the time needed for price stabilization after the listing of the new market capitalization is shorter than the small market value, the revised scheme will set up a quick entry mechanism for the large cap and new shares. Since the listing, the daily total market capitalization of the top 10 stocks in the Shanghai stock market has been accounted for 3 months after listing, so as to ensure the representativeness of the Shanghai Composite Index.

The author believes that the most influential part of the index revision should be incorporated into the listed securities of Ke Chuang Chuang. Since its establishment, the science and technology board has implemented the registration system to finance high-tech services. The establishment of Ke Chuang plate has made up some deficiencies in Shanghai stock market. Over the past decade, China's "new economy" represented by the Internet has risen rapidly, while some traditional industries are declining. If not adjusted in time, the stock market will not perform well in the process of rapid transformation of the economic structure. If ten years ago, there were both traditional industries listed on the Shanghai Stock Exchange and similar companies such as Tencent and Alibaba landed in the Shanghai market, the Shanghai Composite Index in the past ten years would not have lingered at 3000.

No doubt, the mission of establishing the science and technology innovation board is to train the new economic leaders in the future. When a number of high-tech leading enterprises are gradually expanding, the Shanghai Composite Index will set foot on a new journey.

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