The Shanghai Stock Exchange assigned a special team of experts to study a potential overhaul of its benchmark index, the first move in nearly three decades to make the index better reflect China’s fast-evolving economy, reported Caixin.
The team consists of scholars, foreign index experts, brokerage researchers and fund managers and will meet soon to study the revision, the Shanghai Stock Exchange said on Friday.
There have been increasing calls for methodology changes to the 29-year-old Shanghai composite index as investors and experts complained it fails to capture China’s rising new emerging sectors and reflect real economic conditions. The Shanghai index differs from major global indexes such as the S&P 500 Index in the way it calculates market value and the timing for including newly listed stocks, among other issues.
“The Shanghai index has shown distortion in its 30 years’ operation,” said Dong Dengxin, director of Financial Securities Institute of Wuhan University of Science and Technology. “The index has been slow to reflect the structural changes and capture the trend of leading stocks.”