The Chinese stock market and its history:
First, let's go back to the Chinese stock market and its history in order to better understand how the FTSE China A 50 index works.
The Chinese stock exchange is the Shanghai Stock Exchange, also known by the acronym SSE. The stock exchange was created in 1990 in Shanghai and is still located in the business district of Lujiazui in Pudong today.
Among the important dates to know, there's the year 2012 during which the Shanghai Stock Exchange became the most important stock exchange in the People's Republic of China, exceeding the stock exchanges in Hong Kong and Shenzhen. This stock market also became the sixth largest financial centre in the world in terms of market capitalization.
This stock exchange had already seen the light of day in 1891 before being closed in 1949 following the establishment of the People's Republic of the country.
Nowadays, since its reopening in 1990, the stock exchange is being run by an agency of the State Council of the People's Republic of China.
In 2006, the stock exchange listed the shares of 842 Chinese companies with a market capitalization which then reached 915 billion US dollars. But since 2006, the stock market grew by 130%, then by 97% in 2007 thanks to the strong dynamism of the country's economy which then attracted many investors from around the world. In 2007, the SSE Composite then posted an exchange rate of 6,124 points.
Of course, like all financial centres in the world, the Chinese stock market suffered a lot during the 2008 financial crisis and lost 65.5% of its value with a final listing at 1,820 points, which represented a loss of 3,000 billion capitalization dollars. At the end of that pivotal year, 120 million A-share accounts are active and a tiny part of the capital of the companies listed there remains open to the public, which leads to an amplification of price movements.
The Shanghai stock market also benefited, like other Asian stock markets, from a massive influx of foreign capital in the early 1990s. This capital then withdrew, which greatly destabilized the country's currency and then its economy. This led China to end the fixed exchange rate system.
What is the FTSE China 50 index?
Let's move on to the topic of interest, the FTSE China A50 stock index. This stock market index, also known as Xinhua China A50, is a stock market index of the FTSE group. Until 2010, it was also a FTSE-Xinhua joint venture.
The companies that make up this stock market index are selected from the financial centres of Shanghai and Shenzhen which issue A shares, B shares for foreigners being excluded.
As its name suggests, this index tends to reflect Chinese economic activity by grouping together the 50 companies in the country with the highest market capitalization.
What's the composition of the Chinese FTSE China A 50 stock market index?
To go a little further, here's the list of the 50 stocks that make the FTSE China A50 stock market index as well as their sector of activity:
- The Agricultural Bank of China in the banking sector
- The Bank of Beijing in the banking sector
- The Bank of China in the banking sector
- The bank of communications in the banking sector
- BYD Auto in the automotive sector
- The China CITIC Bank in the banking sector
- The China Communications Construction Company in the Heavy Construction Sector
- The China Construction Bank in the banking sector
- The China Everbright Bank in the banking sector
- The China Life Insurance Company in the Insurance Sector
- The China Merchant Bank in the banking sector
- The China Minsheng Bank in the banking sector
- The China's national nuclear energy company in the energy sector
- The China Pacific Insurance Company in the insurance sector
- The China Railway Construction Corporation limited in the Heavy Construction Sector
- The China Railway engineering Corporation in the heavy construction sector
- The China Shenhua Energy Company in the energy sector
- China's shipbuilding industry in the vehicle sector
- The Chinese State Construction Corporation in Heavy Construction
- CITIC Securities in investment services
- The CRRC in the vehicle sector
- The Dagin Railway in the transport sector
- Focus Media Technologies in the computer hardware sector
- GF Securities in investment services
- Greenland Holdings in the real estate sector
- Auto Guangzhou in the automotive sector
- Guosen Securities in the investment industry
- Guotai Junan Securities in the investment sector
- Haitong securities in the investment sector
- Hikivision in the electrical components sector
- Huaneng Power International in the energy sector
- Huatai Securities in the investment industry
- The Industrial and Commercial Bank of China in the banking sector
- The Industrial Bank in the banking sector
- The Jiangsu Yanghe Brewery in the wine sector
- Midea in the household products sector
- Moutai in the wine sector
- New China Life Insurance in the insurance industry
- PetroChina in the energy sector
- The Ping an Bank in the banking sector
- Ping An Insurance in the insurance sector
- Poly real Estate in the real estate sector
- SAIC Motor in the automotive sector
- The Shanghai International Port Group in the transport sector
- The Shanghai Pudong Development Bank in the banking sector
- The Shekou industrial zone in the real estate sector
- Shenwan Hongyuan in finance
- Sinopec in the energy sector
- Wuliangye in the wine sector
Other Chinese stock market indices to know:
If you're interested in the Chinese market and want to invest your capital, you should also know the SSE Composite Index which is the stock market index of the financial centre of Shanghai.
The CSI 300 index is the stock market index of the Shanghai stock exchange made up of the 300 largest stock market capitalisations in the country.
Still among the main Chinese indices, the Dow Jones China 88 Index which is managed by S&P Dow Jones Indices.
Although the FTSE China A50 corresponds to the Shanghai stock market, the SESE 100 index takes up the first 100 market capitalizations of the financial centre of Shenzhen.