Shenzhen Stock Exchange (SZSE) Component Index, or Shenzhen Index is a free float-adjusted market capitalization-weighted index that has been developed by Shenzhen Stock Exchange (SZSE). It tracks the performance of all stocks listed on Shenzhen Stock Exchange’s “A” share market, including stocks from all industry sectors. The index currently consists of 830 of the largest and most trading stocks on the Shenzhen Stock Exchange.
The total market capitalization of the index stands at more than CNY7.3 trillion (US$1.17 trillion), and it is one of the largest stock indexes in China in terms of market capitalization. The index is composed of large-cap, mid-cap and small-cap stocks, accounting for 70%, 20% and 10% respectively. It is designed to measure the overall performance of stocks listed in the Shenzhen Stock Exchange.
The Shenzhen Stock Exchange was established in 1990 to develop the secondary securities market after the Shanghai Stock Exchange. The Chinese Federal Government is the major shareholder of the stock exchange, holding a 68.42% ownership. The remaining 31.58% is held by other institutional or individual investors.
The Shenzhen Stock Exchange has been operating since December of that year, and in its first 13 years of operations, its listing base grown from seven Internet-related stocks to become one of the worlds largest stock exchanges. It is one of the most actively traded exchanges in the world, and its liquidity is ranked second only to the New York Stock Exchange in terms of market turnover.
The Shenzhen index was launched in August 2001. It acts as an important benchmark of the Chinese stock market and a blue chip index as it contains some of the most important and liquid stocks on the Shenzhen exchange. The index is highly correlated to its sibling, the SSE Composite, which tracks stocks listed on the Shanghai Stock Exchange.
It includes stocks from different industry sectors, such as real estate, utilities, banking, information technology and telecommunications. The index is calculated and disseminated on a real-time basis, and is rebalanced several times a year to capture the movement of stock prices and to reflect the changes in market capitalization.
The index is widely used by financial institutions and institutional investors to benchmark the performance of the Shenzhen Stock Exchange. It also serves as a barometer for the Chinese economy, helping to determine the strength of the economy from the performance of the stock market.
Over the years, the index has given investors an indication of the direction of the Chinese market in terms of the level of risk. It has historically been seen as a bellwether of the Chinese market, a sentiment that is given further credence by the growing number of investors who use the index in their stock trading strategies.
The Shenzhen Index is often compared to other global indices, such as the S&P 500 and the Hang Seng Index (HSI). It has performed well in comparison, and is considered one of the most important indices in the world, as it provides accurate data on the movements of a major Chinese stock market.
Overall, the Shenzhen Index is an important benchmark for investors who want to gain exposure to the Chinese stock market, as it provides detailed and up-to-date information on market performance in the country. The index is highly reliable and reflects the performance of some of China’s largest and most influential companies, giving investors an important snapshot of the Chinese economy.
