Recently, the China Securities Regulatory Commission (CSRC) released Eight Measures on Deepening the Reform of the STAR Market to Serve Technological Innovation and the Development of New Quality Productive Forces (hereinafter referred to as the STAR Market Eight Measures), aiming at further deepening reform, enhancing inclusiveness towards new industries, new business forms, and new technologies, leveraging the functions of the capital market, and serving the overall picture of China's modernization. To implement the requirements of the STAR Market Eight Measures and continuously enrich the STAR Market index offerings, the Shanghai Stock Exchange (SSE) announced that the SSE STAR Market Profitable Quality Strategy Index, the SSE STAR Market New Drugs Index, and the SSE STAR Market Value 50 Strategy Custom Index will be released officially on August 23, 2024.
Among them, the SSE STAR Market Profitable Quality Strategy Index selects 50 securities with strong profitability and good cash flow conditions from the STAR Market securities as index samples to reflect the overall performance of the securities with high profitable quality in the STAR Market.
Its sample selection method employs two types of factors: first, measuring the company's profitability through the return on equity (ROE); second, evaluating the company's profitable quality by analyzing the match between operating cash flow and profit. The index samples demonstrate outstanding long-term profitability and good potential for performance growth, with a year-on-year growth rate of net profit reaching 44.9% as disclosed in the latest semi-annual report. In terms of industrial distribution, the index focuses on high-quality development sectors, concentrating on industries of electric power equipment, semiconductors, and electronic devices, with a combined weight of approximately 60%. As of the end of July 2024, the total market value of the index samples was approximately RMB 1 trillion, and the average daily turnover over the past year reached approximately RMB 7.5 billion.
The SSE STAR Brand Name Drug Index selects 30 securities of listed companies involved in the innovative drug field from the STAR Market securities as index samples to reflect the overall performance of securities in the innovative drug field of the STAR Market.
New drugs, as a crucial link in strategic emerging industries, force the transformation and upgrading of China's biomedical industry, safeguarding national health, and promoting high-quality economic development. In recent years, with the successive introduction of policies supporting the development of the innovative drug industry and the expansion of demand due to demographic changes, China's innovative drug industry boasts broad development prospects. As a hub for "hard technology" enterprises, the STAR Market has gathered a group of leading innovative drug companies that have broken through key core technologies and enjoy high market recognition. The SSE STAR Brand Name Drug Index will provide investors with robust representation and investment tools. As of the end of June 2024, the total R&D investment of the index samples over the past year was RMB 26.3 billion, up 14.5% year-on-year, higher than the average level of the STAR Market.
Meanwhile, the SSE STAR Market Value 50 Strategy Custom Index combines quality, value, and low-volatility factors in its sample selection method, selecting 50 securities with low operational risks and valuation levels from the STAR Market securities as index samples to reflect the overall performance of listed company securities with robust value characteristics in the STAR Market. As of the end of July 2024, the total market value of the index samples was approximately RMB 1.9 trillion, with a median P/E ratio of approximately 34 times. They are primarily distributed in the information industry, information technology, and medical and health industries, with a combined weight of approximately 90%.
In recent years, the SSE has consistently focused on implementing strategic deployments such as achieving a high level of scientific and technological self-reliance and independence, continuously improving the STAR Market index system. After the official release of the STAR Market 200 Index and the other three indices mentioned above, the total number of STAR Market indices will reach 24, covering a wide range of types including broad-based, thematic, and strategic indices. The total scale of tracking products both domestically and internationally will amount to nearly RMB 160 billion.
According to the SSE, the STAR Market indices system will be further enriched and improved, more diversified investment targets and performance benchmarks will be provided for investors, the five major sectors which are technology finance, green finance, inclusive finance, pension finance, and digital finance will be consolidated, thereby assisting the capital market in serving the high-quality development of the real economy. (He Xinyi)
The above information is provided for reference purposes only and does not constitute investment advice.
