Shanghai Composite Index

The Shanghai Composite Index is an authoritative set of statistical indicators adopted by domestic and overseas investors in measuring the performance of the Chinese security market. The Shanghai Stock Exchange (SSE) Indices are price indices including the SSE 180 Index, SSE 50 Index, SSE Dividend Index, SSE New Composite Index, SSE Composite Index, Sector Index, SSE Fund Index, SSE Government Bond Index, and SSE Corporate Bond Index. The SSE Composite Index is the earliest one compiled.

The Shanghai Composite Index includes all listed stocks at the SSE. It includes A shares and B shares. The base day for the SSE Composite Index was December 19,1990. The base period is the total market capitalization of all stocks on that day. The base value is 100. The index was launched on July 15, 1991. Companies are weighed according to their size in terms of market capitalization (calculated as the total number of outstanding shares multiplied by the market price per share). Market capitalization represents the total market value of all companies listed on the exchange.

The SSE New Composite Index comprises listed stocks that have completed split-share reform. The base day for the index was December 30, 2005. The index was launched on January 4, 2006.

The SSE 180 has made major improvements in methodology by taking China's current financial market situation into consideration and integrating international experience. Thus, the index represents the Shanghai market situation and forms a performance benchmark index. The SSE 50 is an index of good-quality and large-scale stocks. The SSE Government Bond Index and the Corporate Bond Index were launched in 2003. Thus, SSE Indices reflect overall price changes of stocks listed at the SSE from different perspectives. They provide investors with benchmark systems for different investment portfolios.

There are two major stock exchanges in mainland China: the SSE and the Shenzhen Stock Exchange. Both offer A shares and B shares of common stock issued by Chinese companies. B share listings all carry the same rights as A share listings and receive the same dividends. A shares are restricted to China's citizens residing on the mainland and are denominated in renminbi (RMB). B shares were initially restricted to non-Chinese nationals. In February 2001, the Chinese government allowed Chinese residents to purchase B shares. B shares are not convertible to A shares and are traded in U.S. dollars in the Shanghai stock market. The Chinese authorities allow dividends and capital gains from B shares to be sent abroad. Foreign securities houses can serve as dealers of B shares and if they are designated as qualified foreign institutional investors (QFIIs), they are allowed to trade and invest in A shares. QFIIs are foreign financial institutions that meet certain requirements and are permitted to invest in local currency and use the specific accounts investing in the local securities markets.

With the exception of the stock exchange in Hong Kong, the SSE is the largest stock exchange in China. It is based in the city of Shanghai, with a market capitalization of almost US$3 trillion in 2007. The number of listed companies is around 900 and the SSE is fifth largest in the world. Daily average turnover in 2006 was US$54 billion. Total turnover for stock was around US$8 trillion in 2006. In conclusion, the SSE Indices have become an indicator of China's economy. The current exchange is directly managed by the China Securities Regulatory Commission. Trading hours are 9:30 a.m.-11:30 a.m and 1 P.M.-3 p.m., Monday through Friday.

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