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Index IDEA: New FTSE Russell China A transition indexes measure rapidly growing ChiNext segment

The launch of Shenzhen-Hong Kong Stock Connect in early December signaled the continued expansion of access to the Chinese equity market to market participants outside of China. FTSE Russell has introduced the FTSE China A Innovative Enterprises Indexes to reflect the development.

These new indexes measure the fast growing “ChiNext” stocks listed on the Shenzhen Stock Exchange. Viewing these innovative and fast growing firms through the historical lens of FTSE Russell provides an insightful view on the growing scope and scale of this market.

  • Since the ChiNext Board was created 7 years ago, listings have grown to 570 and market capitalization has grown to $752 billion.
  • ChiNext stocks are now 10% of the total China domestic (A-share) market capitalization.
  • 24% of the weight in FTSE Russell’s ChiNext All Cap Index is in Technology stocks, compared to only 5% Technology in the existing FTSE China A All Cap Index. (ChiNext stocks will be incorporated into FTSE China A Indexes in March 2017)

 

Jessie Pak, Managing Director, Asia, FTSE Russell, said:

“China continues to make good progress in opening its domestic A-share market to international investors and the stock connect programmes have broadened the access to stocks for those investors without QFII and RQFII allocations. The inclusion of ChiNext stocks in our FTSE Global China A Inclusion Indexes reflects the rapid growth of the ChiNext market and enables market participants to better identify and measure the dynamics of this very important market as they consider how and when to implement Chinese equities into their overall investment portfolio”.

With a strong track record in developing China market indexes, FTSE Russell China benchmarks are widely recognised by investors and issuers globally as the leading measure of the China equity market and the natural choice for creating China-focused investment products. The broad spectrum of market benchmarks and well known tradable indexes, cover all sectors and Chinese share types, a range of asset classes and various investment themes including style, dividend yield, and domestic and global exposure indexes.

In 2015, FTSE Russell launched its FTSE Global China A Inclusion Indexes as a transitional tool for investors in preparation for the eventual inclusion of China A-shares in its widely followed global benchmarks. China A-shares remain on the FTSE Watch List for possible inclusion as a Secondary Emerging market.

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© 2017 London Stock Exchange Group plc and its applicable group undertakings (the “LSE Group”). The LSE Group includes (1) FTSE International Limited (“FTSE”), (2) Frank Russell Company (“Russell”), (3) FTSE TMX Global Debt Capital Markets Inc. and FTSE TMX Global Debt Capital Markets Limited (together, “FTSE TMX”) and (4) MTSNext Limited (“MTSNext”). All rights reserved.

FTSE Russell® is a trading name of FTSE, Russell, FTSE TMX and MTS Next Limited. “FTSE®”, “Russell®”, “FTSE Russell®” “MTS®”, “FTSE TMX®”, “FTSE4Good®” and “ICB®” and all other trademarks and service marks used herein (whether registered or unregistered) are trade marks and/or service marks owned or licensed by the applicable member of the LSE Group or their respective licensors and are owned, or used under licence, by FTSE, Russell, MTSNext, or FTSE TMX.

All information is provided for information purposes only. Every effort is made to ensure that all information given in this publication is accurate, but no responsibility or liability can be accepted by any member of the LSE Group nor their respective directors, officers, employees, partners or licensors for any errors or for any loss from use of this publication or any of the information or data contained herein.

Views expressed by Jessie Pak of FTSE Russell are as of January 18th and subject to change. These views do not necessarily reflect the opinion of FTSE Russell or the LSE Group.

No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE China A Innovative Enterprise Indexes the fitness or suitability of the indexes for any particular purpose to which they might be put.

No member of the LSE Group nor their respective directors, officers, employees, partners or licensors provide investment advice and nothing in this IDEA should be taken as constituting financial or investment advice. No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any representation regarding the advisability of investing in any asset. A decision to invest in any such asset should not be made in reliance on any information herein. Indexes cannot be invested in directly. Inclusion of an asset in an index is not a recommendation to buy, sell or hold that asset. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.

No part of this information may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the applicable member of the LSE Group. Use and distribution of the LSE Group index data and the use of their data to create financial products require a licence from FTSE, Russell, FTSE TMX, MTSNext and/or their respective licensors.

Past performance is no guarantee of future results. Charts and graphs are provided for illustrative purposes only. Index returns shown may not represent the results of the actual trading of investable assets.

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