New Shanghai Composite Index

Introduction

The Shanghai Composite Index is a stock index of all the stocks traded on the Shanghai Stock Exchange. Its one of the major indicators of the economy in the Peoples Republic of China and is included in the Hang Seng Index family. The index is calculated and published by the Shanghai Stock Exchange (SSE).

History

The Shanghai Composite Index was first established in February 1990 and was initially composed of all stocks traded on the Shanghai Stock Exchange. It reached a historical high of 6124.04 points on Saturday, May 20, 2006. Since then, the index has had a series of downward trends, and reached a low of 1665.22 on November 20, 2008, following the Global Financial Crisis that gripped China and the global markets.

Today

At the time of writing, the Shanghai Composite Index stands at around 3771.05 points, around 40% lower than its all-time high. This low value can mainly be attributed to the economic slowdown in China, caused by the US-China trade war and the effects of the COVID-19 pandemic. In particular, the manufacturing sector in China has been hit the hardest, with global brands such as Apple and Nike cutting back their production in the country and shifting production to other countries. This has had a knock-on effect on the stock market in China, and the Shanghai Composite Index is no exception.

Drivers of the Shanghai Composite Index

The Shanghai Composite Index is heavily influenced by the macroeconomic environment in China. This includes China’s GDP, unemployment rate, and inflation rate. As these indicators have a direct impact on the health of Chinese companies, they have a particularly strong impact on the index.

In addition to the macroeconomic environment, the SSE is also heavily regulated by the Chinese government. Government regulations such as interest rates, taxes, and foreign investments have the potential to have a large impact on the index.

Conclusion

The Shanghai Composite Index is an important financial indicator of the Chinese economy. It is heavily influenced by the macroeconomic environment in China and is subject to the regulations of the Chinese government. Though the index is currently trading far below its all-time high, in the long-term, the index is likely to resume its upward trend as China’s economy recovers from the effects of the trade war and the pandemic.

The Shanghai Composite Index has been volatile in recent sessions as investors watch developments in negotiations between the US and China over trade.

The Shanghai Composite is down 3.2 percent this week in choppy trading, having bounced around between gains and losses almost daily. It was slightly lower on Thursday morning.

Traders are watching talks between the two countries closely, as they progress towards a long-awaited trade deal. Market sentiment has been up and down as news reports carry conflicting information.

In November, US President Donald Trump said the two sides had made substantial progress towards a trade agreement, sending the Shanghai Composite to its highest level in three weeks.

However, doubts quickly emerged around his comments and US stocks had their worst day in four months.

The Shanghai Composite is a major measure of performance for Chinese stocks, encompassing all stocks traded on the Shanghai Stock Exchange.

It is widely tracked by investors, who use it to provide insights into China’s economic performance.

The index is a useful gauge of overall market sentiment. Recent movements suggest that investors are keenly watching the trade talks and any news of a breakthrough could cause the index to jump higher.

At the same time, news of further delays or an increase in tensions could cause the index to fall, as investors become more cautious.

It remains to be seen how the critical trade talks between the two sides will unfold, and what impact the outcome will have on the Shanghai Composite.