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Page 1: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

Tracking the Benefits of Growth

Page 2: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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I. Introduction of the SZ-HK Stock Connect

II. Key Features of Shenzhen Stock Market

III. Universe of SZ-HK Stock Connect

IV. Flagships of SZSE Index Family

Page 3: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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Page 4: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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At this stage, Shenzhen Northbound Connect is

restricted to a range of eligible stocks. The

universe is constituents of SZSE Component

Index and SZSE Small/Mid Cap Innovation

Index with a market capitalization of at least

RMB 6 billion, and SZSE-SEHK A+H shares.

Eligible Stocks for Northbound Trading

Page 5: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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Page 6: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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1990 1992 2002 2004 2006 2009 2015 2016

SZSE

Founded B-Shares

SME

Board

OTC Market ChiNext Market

Mutual Recognition of Funds

(MRF)

QFII

Launched SZ-HK Stock Connect

Committed to developing multi-tiered capital market system

Offering investment opportunities in innovative and growth sectors in China

Offering a liquid marketplace for a diversified investment community

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• Trading Value • USD 19 trillion in

2015

• USD 2.9 trillion YTD

• Daily Turnover

• 4.79% in SZ

Market

• Market Capitalization

• USD 3.09 trillion

• Number of Listed Companies

• 1761 listed

companies No.12 No.7

No.4 No.1

After over 2 decades of development, SZSE’s market capitalization, number of listed companies and

trading value rank at forefront among stock exchanges in the world.

Page 8: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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The SZSE consists of the Main Board, the SME Board and the ChiNext Market. They serve

companies at different developing stages and offer investors diversified portfolio.

32%

44%

24%

27%

44%

29%

28%

44%

28%

Main Board SME Board ChiNext Market

Main Board SME Board ChiNext

Market

Launch Date Dec.1,1990 May.17,2004 Oct.30,2009

Services

Group

Market- driven

blue chips

Niche

champions

High-tech

enterprises

Market Cap USD 0.99

trillion

USD 1.36

trillion

USD 712.9

billion

Listed

Companies 478 784 504

Average

Market Cap USD 2.1 billion

USD 1.7

billion

USD 1.4

billion

Free Float 80.9% 67.3% 58.3%

Inner: Market Cap

Middle: Listed

Companies

Outside: Trading

Value

Breakdown of market share

Page 9: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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66%

46%

78%

34%

54%

22%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

A-share market

Shanghai market

Shenzhen market

non-SOEs

SOEs

Breakdown of listed companies number by ownership structure

Breakdown of market cap by sector

Market structure by sector and issuers’ ownership of Shenzhen market are different but complementary

to other market.

12%

4%

20%

18%

18%

19%

13%

10%

16%

10%

8%

13%

23%

34%

10%

6%

4%

8%

6%

6%

7%

2%

1%

3%

3%

5%

2%

6%

10%

1%

0% 20% 40% 60% 80% 100%

A-share market

Shanghai market

Shenzhen market

Information Technology Industrials Consumer Discretionary Materials

Financials Health Care Consumer Staples Telecommunication Services

Utilities Energy

Page 10: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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Industrials: Technical Progress And Industrial Upgrading

400+ listed companies in SZSE

ZOOMLION(000157)

Among world’s best in concrete machinery and hoisting

machinery

CIMC(000039)

Leading logistics and energy equipment supplier in the

world

Financials: Horizontal Expansion

Consumer Industry: Sustainable Growth

80+ listed companies in SZSE

Ping An Bank (000001)

The pioneer of the commercial banks of China

Bank of Ningbo (002142)

Lowest ratio of non-performing loans in the sector

Shenwan Hongyuan (000166)

Largest securities company in China

VANKE-A(000002)

Largest real estate developer in China

370+ listed companies in SZSE

GREE(000651)

World’s largest air conditioning manufacturer

Chongqing Changan Automobile (000625)

Largest domestic automobile producer in

China

Yunnan Baiyao (000538)

Leading Chinese herbal medicine producer

with history over one hundred years

WULIANGYE(000858)

Largest producer of Chinese liquors

CHANGYU(000869)

Largest winery in Asia

Shenzhen Overseas Chinese Town

(000069)

Domestic leader in tourism and culture

industry

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IT is Good: “Internet+”

220+ listed companies in SZSE

Eastmoney(300059)

Online finance, wealth management and fund distribution

Flytech (002230)

The largest voice tech company in Asia

Kingsun Science and Technology (300235)

Online education solution

High-End Equipment Manufacturing: Made in China 2025

Green Industry 180+ listed companies in SZSE

BYD (002594)

World largest new energy vehicle manufacturer

Gold Wind (002202)

World largest wind power developer and

manufacturer

Han’s Laser (002008)

Precise technology, the largest laser application

company in China

Hikvision (002415)

Largest surveillance system manufacturer

Ofilm (002456)

Largest smart mobile phone screen manufacturer

Tgood (300001)

Provides power transformer and distribution system

for high-speed rail.

Biomedicine and General Medical Services

100+ listed companies in SZSE

Lepu Medical (300003)

Develops and produces cardiovascular

disease diagnosis and treatment equipment

Culture and Entertainment Industry

95 listed companies in SZSE

Wanda Cinema Line (002739)

The largest cinema operator in both China

and the US

Hunan TV (000917)

Leading cable network and media content

provider

700 issuers in strategic emerging industries

Page 12: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

More than two decades of experience.

Trusted benchmarks of multi-tiered SZSE market.

Display unique characteristics of SZSE securities.

Help investors tracking the fast-growing market.

11

Page 13: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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Page 14: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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Page 15: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

SZSE Code ISIN Bloomberg

Ticker Reuters RIC

No of

Constituents

Review

Frequency Base Value

399001 CNM0000000C8 SICOM .SZSC1 500 Semi-annually 1000 as of July

20,1994

Methodology Construction

Universe: To be included in the index, a security must be listed on Shenzhen Stock Exchange for more than 6

months. ST or *ST stocks are excluded from the index universe.

Selection: Based on a 1:1:1 weighted average of the three measures: full market capitalization, free-float

market capitalization, and turnover.

Weighting: Actual value of constituent’s free float market capitalization.

Quick Facts

The SZSE Component Index is designed to measure the performance of the 500 largest and most liquid A-share stocks

listed and trading on the Shenzhen Stock Exchange.

14

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The representative of innovation sectors

The most influential large-cap and blue chips index

The earliest and widely used stock index

NASDAQ Composite

CSI 300

SSE Composite Index

China market U.S. market

SZSE Component Index

S&P 500

Dow Jones Industrial Average

Market positioning

Page 17: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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43%

22%

8%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Nasdaq Composite

SZSE Component Index

CSI300

SSE 50

Information Technology Industrials Consumer Discretionary Financials

Materials Health Care Consumer Staples Telecommunication Services

Utilities Energy

Large contribution from Information Technology Sector sets the index

different from other large cap A-share indices.

Breakdown of market cap by sector

Page 18: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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Moderate-size

Market Capitalization(USD billion) Constituent Weight

Index Full Free float Average Largest Smallest Largest Smallest

SZSE

Component Index 1640.90 728.06 3.28 36.07 0.62 2.72% 0.07%

SSE 50 1720.09 556.57 34.39 181.22 4.74 9.67% 0.43%

CSI 300 3298.09 1274.95 10.99 181.22 2.22 4.18% 0.02%

Index ROE(2015A) Dividend Yield

(2015A)

Growth Rate of Net

Income(2015A)

Growth Rate of Net

Income (2016E)

SZSE Component Index 10.08% 0.81% 14.42% 31.09%

SSE 50 11.83% 3.20% -3.32% 0.05%

CSI 300 11.64% 2.33% -0.35% 3.62%

High-growth

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Market Share of SZSE Component Index Constituents (as percentage of all the Shenzhen A-shares)

The index represents approximately 55% of the total market capitalization

of Shenzhen securities.

55% 58% 44%

67% 81%

0%

30%

60%

90%

Total Market Cap Free Float Market Cap Value of Trading Operating Income of Constituents

Net Income of Constituents

Page 20: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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Breakdown of market cap by board

The constituents allocation is closely in sync with the continually growing

market by absorbing more and more SME board and ChiNext companies.

44%

38%

18%

35%

42%

23%

Main Board

SME Board

ChiNext Market

SZSE Component Index SZSE listed companies

Page 21: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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227 or 45% constituents are engaged in National Strategic Emerging

Industries

8

13

15

26

34

34

97

0 10 20 30 40 50 60 70 80 90 100

New-energy Vehicles

New Materials

Alternative Energy

High-End Equipment Manufacturing

Biotechnology

Green Industry

New Information Technology

Page 22: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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360 or 72% of constituents are non-SOEs.

Home to companies on the forefront of innovation and gathering strength in the capital

market.

0

20

40

60

80

100

120

140

2003 2005 2007 2009 2011 2013 2015

Total Market Cap of GREE (RMB billion) Traditional

Industries Leaders

Innovative

Enterprises

Constituents are full of market leaders and innovative enterprises

Page 23: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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Applied to rules-based index methodology, constituents are screened,

selected and weighted to ensure the index is investable and tradable.

The index is designed for use in the creation of index tracking funds,

derivatives and performance benchmark.

Free-float % Free-float market Cap

Index level On average Smallest Smallest

44% 50% 7% 0.51 (USD billion) SZSE Component

Index

ETFs

Index Structured

Funds

OTC Index Funds

Page 24: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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Page 25: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

SZSE Code ISIN Bloomberg

Ticker Reuters RIC

No of

Constituents

Review

Frequency Base Value

399015 CNM100002KC9 SZ399015 .SZSESCI 500 Semi-annually 1000 as of Dec

30,2011

Methodology Construction

Within the index universe of SZSE1000, the rest 500 securities after the 500 constituents of SZSE Component Index

comprise of the SZSE Small/Mid Cap Innovation Index.

Quick Facts

The SZSE Small/Mid Cap Innovation Index is designed to represent the performance of the small and middle-cap

segment as well as those fast-growing and innovative listed companies of Shenzhen market.

SZSE 1000

SZSE Component Index

(500 constituents)

SZSE Small/Mid Cap. Innovation Index

(500 constituents)

24

Page 26: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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Index Return Annualized Return Annualized Std Dev Sharpe Ratio

SZSE Small/Mid Cap

Innovation Index 165.34% 25.26% 31.79% 0.84

CSI300 34.57% 7.09% 27.15% 0.33

Index performance, risk and return characteristics (2012-2015)

High return, high volatility, high risk adjusted return

Cumulative index performance (2012-2015)

-100%

0%

100%

200%

300%

400%

12/2011 06/2012 12/2012 06/2013 12/2013 06/2014 12/2014 06/2015 12/2015

SZSE Small/Mid Cap Innovation Index

CSI300

Page 27: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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Adequate liquidity and investability Turnover

(Daily Average) Free-float %

Free-float market Cap

(USD billion)

Index Value

(USD billion) Ratio Index level Average Smallest Smallest Average Mean

SZSE Small/Mid Cap

Innovation Index 12 2.44% 42.79% 48.05% 8.38% 0.18 0.53 0.48

High valuation supported by high growth

60

12

SZSE Small/Mid Cap Innovation

CSI300

P/E(LYR)

49%

8%

1.23

1.79

SZSE Small/Mid Cap Innovation

CSI300

CAGR of Net Income

(2016E-2018E)

PEG

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20%

19%

18%

17%

7%

6%

5% 3% 3% 2%

Industrials

Consumer Discretionary

Materials

Information Technology

Health Care

Consumer Staples

Financials

Telecommunication Services

Energy

Utilities

50%

21%

29%

SME Board

ChiNext Market

Main Board

SME board and ChiNext market listed constituents account for 70%+

R&D expenditures accounts for 4.41% of operating income

Breakdown of market cap by board and sector

Page 29: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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Page 30: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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Fast-growing blue-chip index

Represent the performance of Shenzhen large-cap segment

Balanced sector allocation, the top 3 sectors are Financials, IT and Consumer Discretionary.

A variety of linked index products including ETFs, structured index funds, LOFs and OTC index funds.

SZSE Code 399330

ISIN CNM0000002G5

Bloomberg Ticker SZ399330

Reuters RIC .SZS100PI

No of Constituents 100

Average Market Cap 7.20 USD billion

Average Free-float

Market Cap 3.27 USD billion

25%

21%

21%

10%

8%

7%

4% 3% 1%

Financials

Information Technology

Consumer Discretionary

Industrials

Consumer Staples

Materials

Health Care

Telecommunication Services

Utilities

Energy

Breakdown of market cap by sector

Page 31: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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Offering exposure to China’s high quality SMEs

Fostering niche market leaders

Remarkable historical performance, 11yr-annualized return of 19% since June 2005

Reasonable P/E ratio (≈ 32), high growth potential supported by high ROE (12%)

SZSE Code 399005

ISIN CNM1000001B6

Bloomberg Ticker SZ399005

Reuters RIC .SZSMEP

No of Constituents 100

Average Market Cap 4.17 USD billion

Average Free-float

Market Cap 1.72 USD billion

29%

14%

12%

12%

11%

9%

7% 5%

1% Information Technology

Industrials

Consumer Discretionary

Health Care

Materials

Financials

Consumer Staples

Telecommunication Services

Breakdown of market cap by sector

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Barometer of China’s innovative sectors

90% constituents are state-certified high-tech enterprises,70% from strategic emerging industries

Neither secondary board nor tiny market. Constituents are of high quality in adequate liquidity,

profitability and growth potentiality.

A relatively low correlation to other major A-share indices in historical performance.

SZSE Code 399006

ISIN CNM100002K13

Bloomberg Ticker SZ399006

Reuters RIC .CHINEXTP

No of Constituents 100

Average Market Cap 3.17 USD billion

Average Free-float

Market Cap 1.35 USD billion

49%

17%

11%

11%

8%

2% 1% Information Technology

Industrials

Health Care

Consumer Discretionary

Telecommunication Services

Consumer Staples

Materials

Breakdown of market cap by sector

Page 33: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

The indices are licensed to over 30 domestic and overseas fund issuers as underlying indices for ETPs

and passively-managed investment funds.

As of the end of 2016Q1, 76 index products with total net assets value around USD 11billion.

16

24

5 5

25

1 ETFs

Index Structured Products

LOFs

Overseas listed ETPs

OTC Index Funds

Financial Plans

We provide services of

Index licensing

Index data licensing

Bond valuation service

Custom indices, co-brand

indices, index calculation

agency

32

Page 34: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

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We build close relationship and explore collaborative opportunities with

international financial institutions and exchanges.

Page 35: Tracking the Benefits of Growth - CNINDEX · the Benefits of Growth . 1 ... SZSE Code ISIN Bloomberg Ticker Reuters RIC No of ... a security must be listed on Shenzhen Stock Exchange

For more information please visit

www.cnindex.com.cn

Or contact us: Tel:+86-755-83241251

E-mail: [email protected]

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