Shanghai looks to overhaul key index

Business | Bloomberg and Reuters 28 May 2020

The Shanghai Stock Exchange is planning to adjust the timing for newly listed stocks to be included in the benchmark index and to remove some chronically loss-making shares.

As part of a long-term overhaul now under consideration, the exchange may also calculate a company's market value for the index based on its free float rather than total outstanding shares.

If approved, the shift could lead to increased weightings for technology and other new economy sectors and reduce those for financial services and energy.

Exchange executives are also evaluating whether to include stocks listed on the tech-heavy Star board in the index or to create a separate gauge for them.

The planning comes after April profits of China's industrial firms fell 4.3 percent year-on-year to 478.1 billion yuan (HK$517.6 billion).

That followed a plunge of 34.9 percent in March, according to the National Bureau of Statistics.

For the first four months of the year, industrial firms' profits fell 27.4 percent year-on-year to 1.26 trillion yuan after a 36.7-percent slump in the first three months.

But firms in the automobile sector last month recorded year-on-year profit growth of 29.5 percent.

And special-purpose equipment, electrical machinery and electronics also notched up significant recoveries in April.

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