Unpack 6 ups and downs, still stable growth of the A-share index


Whenever we discuss the rise and fall of the market, when we discuss the market situation, for example: the market has now exceeded 3500 clouds, the index mentioned here can only be the Shanghai Composite Index.Shanghai Composite Index in A sense has become A synonymous with A shares, today we will dismantle 6 ups and downs after the stable growth of the A-share veteran index – Shanghai Composite Index (code)!The full name of Shanghai Composite Index is Shanghai Composite Index, so some investors also refer to it as Shanghai Composite Index for short.Its long history can be seen from the “1” code of the Shanghai Stock Index: the Shanghai Stock Index, launched on July 15, 1991, is the oldest of the major indexes in the A-share market (some of the a-share non-major indexes have A longer history than the Shanghai Stock Index, which we will discuss later).Main index is different from the other world securities market, the Shanghai composite index is a composite index, which are considered as much as possible will be listed on the Shanghai stock exchange, stock index into range, rather than the shenzhen component index, the s&p 500 and nasdaq 100 other markets such as the important index that selectively into some stocks, so the greatest characteristic of Shanghai stock index is full.But it has also attracted criticism.After China’s accession to the WTO, the substantial growth of China’s economy has driven the investment demand of residents. As one of the major a-share indexes, the Shanghai Composite Index has naturally become the focus of attention, but its increase is less than other investment products.Some investors believe the index’s all-inclusive nature has led to the inclusion of many low-value stocks, whose performance has dragged down the index’s rise, leading to growing calls for reform of the index’s compilation practices.On July 22, 2020, China Securities Index Corporation announced the reform plan of Shanghai Stock Index, which includes three aspects: 1. Eliminate ST and *ST stocks to optimize the quality of Shanghai Stock Index components; 2.2. The new shares will be included in the index 3-12 months after listing to avoid the impact of large stock price fluctuations on the index at the initial stage of listing;3. Stocks of the Science and Technology Innovation Board are included in the index to enhance the comprehensiveness of the Shanghai Composite Index.After the reform, the Shanghai Composite Index combines the comprehensiveness of the composite index and the representativeness of the component indexes, which some investors believe will become the starting point of the a-share “index bull”.The Shanghai Composite Index is based on December 19, 1990, with a base point of 100 points.Since it is a composite index, the Shanghai Stock Index does not need to be sorted by market capitalization, turnover or other factors, so the selection criteria for its constituent stocks are very simple: Stocks listed on the Shanghai Stock Exchange and depositary receipts issued by red-chip companies (excluding ST and *ST securities).At present, the Shanghai Composite Index contains 1705 A shares, 44 B shares and 1 red chip depositary receipt.Three months after a new stock is listed, if the stock ranks in the top 10% of the average daily value of stocks in the Shanghai Stock Exchange, it will be included in the Shanghai Stock Exchange index before the opening of the next trading day. If the above requirements are not met, the stock will be included in the Shanghai Stock Exchange Index after one year of listing.The industry distribution of THE Shanghai Stock Exchange Index can basically represent the overall industry distribution of the companies listed on the Shanghai Stock Exchange.As can be seen from the figure above, the industry distribution of SSE index is relatively average, but it is relatively biased towards traditional industries. Information technology, communication services, medicine and health industries representing high and new technologies account for about 17.39%.At present, nearly half of the listed companies on the Science and Technology Innovation Board have not been included in the Sse Index (less than one year after listing), and the inclusion of this branch into the index may significantly enhance the “science and technology” attribute of the SSE Index.Because the Shanghai Composite Index uses the total market capitalization weighting method to calculate the index value, Kweichow Moutai, which has the largest total market capitalization of A-shares, has the highest weight, and more than the second and third place combined.In addition, it is obvious that the financial industry is still the most important weighted sector of the Shanghai Composite Index, with four banks and two insurance stocks among the top ten weighted stocks.The K line of Shanghai Stock Index is the history of The development of China’s securities market. Its ups and downs can be summarized into three stages: the initial stage from 1991 to 2001, the growth stage from 2002 to 2018, and the maturity stage from 2019 to the present.According to statistics, there have been six periods in the history of the Shanghai Composite Index that saw a decline of more than 50%, four of which occurred between 1991 and 2001.During this period, the securities market was not mature, and both the rules and institutions and the financial intelligence level of investors were constantly improving, which was the embryonic period of the securities market.Since 2002, the Volatility of the Shanghai Composite index has been much more moderate, but this does not mean that the stock market has matured completely.During this period, the long, flat volatility in the Shanghai Index built up a lot of trading sentiment, which contributed to two bull markets in 2007 and 2017, followed by sharp short-term declines.This period of overall stability but periodic sharp ups and downs of the period is the growth of the securities market.Since 2019, due to the continuous improvement of securities laws and regulations and the continuous improvement of investors’ financial quotient, the Shanghai Composite Index has shown a steady rise, and the securities market has entered a mature period.During this period, the stock market broke away from the stage of conceptual speculation and basically reflected the situation of economic growth. Ordinary investors began to share economic development dividends from the stock market.The Shanghai Composite Index is more regarded by investors as a barometer to observe market sentiment, but not many investors actually trade it. Most investors prefer to invest in the affiliated funds of sse 50, SSE 180 and other component indexes.According to data from the official website of China Securities Index and Tiantian Fund, there are currently 5 funds tracking the Shanghai Stock Exchange index, including 2 ETFs, 2 ETFs connected, and 1 index fund. The total size of the 5 funds is about 2 billion RMB.Data from six, suits the crowd rise and website according to the Shanghai composite index compiled rules and actual performance, the following types of investors or more suitable to its associated funds to invest in: 1, the appetite for risk is low, the pursuit of average income of the securities market, on the premise of guarantee the stability of long-term assets value-added, can accept the small losses within a certain time;2. Investors who are older or have a need for family asset allocation but have less cash to invest are more suitable for SSE index linked funds;3, unless the normal stage of sharp rise, the rest of the period are suitable for the Shanghai Composite index related funds.Statement: Fund research, analysis and fund portfolio services do not constitute investment consulting or advisory services. The comments posted on this account only represent personal views and do not constitute any investment advice or basis for trading.Fund investment is risky and the past performance of the fund and portfolio of funds does not represent continued performance in the future.Please carefully read the relevant legal documents and risk disclosure statements, based on their own risk tolerance for rational investment.Welcome to pay attention to personal public account: Compound interest silent # fund ## Financial management #

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