CSI 300

The index tracks a group of the largest and most liquid mainland Chinese shares traded across two venues at once: the Shanghai and Shenzhen exchanges. Its value is recalculated throughout the trading session and serves as a benchmark for how China's domestic market is moving on average. Futures, options and index funds are built on it, and fund managers measure the performance of their portfolios against it.

How the constituents are selected

Each stock's weight is determined by its free-float market value. The more of a company's shares are actually available for purchase on the exchange, the more strongly it pulls the index with it. As a result, large banks, insurers and consumer goods makers move the index far more than small industrial issuers, even though formally they all sit in the same basket. The line-up is reviewed periodically: stocks that lose turnover or market capitalisation drop out, and new ones take their place. Non-residents do not access these shares directly but through the exchange links with Hong Kong, quotas and depositary instruments such as GDRs. It is this infrastructure, not the basket itself, that determines which parts of the index can actually be bought from Russia.

How to read the index value

The logic of reading any country index is the same: the number itself carries no meaning, and only its change from the previous level matters. On this site you can see this with the Russian indices:

The Chinese benchmark is read the same way — by comparing the daily or annual change, not the absolute value in points.

Where the confusion arises

The most common mix-up is treating the Hang Seng as "the Chinese index". These are different baskets in different currencies: the Hong Kong index includes technology holding companies and stocks registered outside the mainland, and it can diverge from the domestic market for months at a time. The second misconception is reading the index as a gauge of the Chinese economy: it reflects the valuation of a narrow group of the largest issuers and their expected earnings, not the country's output or consumption. The third is forgetting the currency component: for an investor who measures returns in roubles, the move in the index and the move in the yuan add up, so the resulting volatility differs from what the index chart shows. Finally, access to instruments on this index within the Russian market is restricted by qualified investor status requirements.