China’s position as the second-largest economy in the world makes it an important market for global investors looking to diversify and access its dynamic growth potential. The continued liberalization of China’s capital markets and the inclusion of China A-shares in some global indices has also contributed to the growth of China’s stock market. Our China indices offer both domestic and international investors the opportunity to access China’s growth while placing a premium on transparency and liquidity.
The Many Ways to Access China's Markets
Since the launch of the Dow Jones China 88 Index in 1996 and the S&P China BMI in 1997, S&P Dow Jones Indices has continued to innovate and allow foreign investors a clearer view of the many facets of China’s markets. All our indices can be used for benchmarking and performance evaluation purposes, or licensed to create financial products tracking specific investment objectives.
Comprehensive, unbiased representations of global markets
Representative of specific markets and efficient to replicate
Track the performance of local-currency-denominated government and corporate bonds from China
Representative of specific investment themes or strategies
Broad Benchmark Indices
S&P DJI’s China indices offer extensive coverage, including over 4,000 securities across all segments of the Chinese equity market.
In December 2013, S&P DJI expanded its existing A-share index offerings with the launch of the S&P China A BMI. At the same time, we introduced the S&P Total China BMI, combining A-shares with offshore listings, in order to provide a comprehensive view of the Chinese equity market. Both indices are constructed based on the well-known S&P Global BMI (Broad Market Index) methodology.
In September 2019, S&P DJI added eligible China A-Shares that are accessible via the Shanghai-Hong Kong Stock Northbound Connect or Shenzhen-Hong Kong Stock Northbound Connect facilities to all our global benchmark indices with an emerging market classification. In consideration of the large size of the market and ongoing efforts to increase accessibility to foreign investors, China A-Shares are represented within these index families at a reduced weight factor of 25% of each company’s investable weight factor.
The following global benchmark families now include eligible China A-Shares: S&P Global BMI, S&P/IFCI, Dow Jones Global Indices, S&P Global Property Indices, S&P Global BMI Shariah, and Dow Jones Islamic Market Indices.
Investors interested in China’s stock market often cite its growth and potential opportunity for future appreciation. S&P DJI creates tools designed to help market participants measure the growth of this dynamic market, providing transparent, market-representative indices comprised of liquid constituents that are easy to replicate and designed to support financial products.
The S&P China 500’s primary objective is to be representative of the total Chinese equity market. The index is designed to track the 500 largest and most-liquid Chinese companies while approximating the sector composition of the broader equity market. All Chinese share classes, including A-shares and offshore listings, are eligible for inclusion, subject to meeting minimum size and liquidity requirements. The largest companies (measured by total market cap, including all share classes) are selected within each GICS® sector with the goal of matching the sector weights of the broader S&P Total China BMI.
Fixed Income Indices
The S&P China Bond Index seeks to track the performance of local-currency-denominated government and corporate bonds from China. Chinese government bonds include Chinese sovereign bonds, government bills, China agency bonds, and Chinese provincial bonds. The corporate bond market in China has experienced strong growth over the past decade and currently represents 31% of the S&P China Bond Index’s composition. The corporate sectors represented are Financials, Communication Services, Utilities, and Industrials.
The Chinese bond market has grown significantly over the last decade. In fact, the S&P China Bond Index has increased nearly 8-fold since its first-value date on Dec. 29, 2006. See how the performance of its two components compare over that period.
In contrast with market capitalization-based and GICS® sector indices, which select companies according to their size, sector or industry, strategy indices reflect the performance of a rules-based investment strategy. That investment strategy may involve selecting companies based on attributes like earnings quality or growth, or it may track specific trading techniques or financial instruments in order to increase diversification and manage risk. This category includes single- and multi-factor, dividend income, and other types of quantitative strategies.
Source: S&P Dow Jones Indices LLC. Data from Dec. 31, 2007 to Dec. 31, 2018. Factor indices are based on the S&P China A-Share Index. Past performance is no guarantee of future results. Chart is provided for illustrative purposes and reflects hypothetical historical performance. Please see the Performance Disclosure at the end of this document for more information regarding the inherent limitations associated with back-tested performance.
Differentiated Exposure to the "New China" Economy
As China’s economy continues to mature, expectations that consumption and service-related industries will become increasingly important are on the rise. Because the country’s stock market remains dominated by “old economy” sectors, some investors are seeking alternative index solutions in order to participate in the next leg of China’s growth.
The S&P New China Sector Index is designed to measure the performance of China- and Hong Kong-domiciled companies in consumption and service-oriented industries. All Chinese share classes, including A-shares and offshore listings, are eligible for inclusion.
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