The SSE Composite is the index of all shares traded on the Shanghai Stock Exchange. This makes it a quick way to track the overall movements of the entire market. Unlike many similar indices, it is based solely on current stock prices and isn't weighted based on previous activity.
The figure listed for the SSE Composite is produced by adding up the market capitalization of every share on the market, which is the number of shares in circulation multiplied by the current price. This total market capitalization is then adjusted to show its proportion with the figure for the day the index started, which is 19 December 1990. The index on that day was 100. This means that when the index hit 1000, the total market capitalization was 10 times as much as it was on the day the index launched.
The SSE Composite takes into account both A and B shares. This can cause confusion as these terms have different meanings in different places. In the Unites States, an A share is a class of stock that has the highest priority when it comes to voting rights. In China, an A share is one traded in the Chinese currency Renmibi, while a B share is traded in a foreign currency, such as the US dollar. This latter definition applies to the SSE Composite, meaning it covers all stocks traded on the exchange, no matter their currency.
As with most stock markets, there are other indices that cover a more restricted range of stocks on the exchange. These include the SSE 50 Index, which covers the 50 largest companies, and the SSE 180 Index. These are equivalent to indices such as the FTSE 100 in the United Kingdom or the Dow Jones Industrial Average.
One major difference with the SSE Composite compared to other indices covering an entire stock market is that the companies in some major areas of Chinese industry and business are not publicly traded. These include some companies in banking or healthcare that are still partially or fully controlled by the government. Because of this, the SSE Composite is not as reliable a measure of the entire economy as similar indices may be in other countries.
