A Hub for Strategic Emerging Industries and Industrial Upgrading
The full name of the ChiNext 200 Index is the ChiNext Mid-Cap 200 Index (Index Code: 399019.SZ), which was launched on November 15, 2023. The index selects the 200 stocks with the largest market capitalization and best liquidity after excluding those already included in the ChiNext Index.
In terms of market capitalization coverage, the ChiNext Index primarily covers the top 45% of securities by market capitalization on the ChiNext board, while the ChiNext 200 Index covers securities in the approximately 45%-60% range, further enriching the size-based indices of the ChiNext market.
Specifically, the ChiNext 200 Index has a distinct focus on emerging industries. The sector distribution of the index is relatively balanced, with the top three sectors being computers, electronics, and pharmaceuticals & biotechnology, accounting for nearly half of the index. In terms of the attributes of the index constituents, strategic emerging industries account for about 87% of the total weight.
Against the backdrop of accelerating economic restructuring and promoting the transition from old to new growth drivers, emerging industries such as computers, electronics, pharmaceuticals, and high-end manufacturing represent the future direction of growth. The ChiNext 200 Index, which is heavily concentrated in these sectors, is expected to continue benefiting from the rise of emerging industries, marking the first layer of growth beta for the index.
At the same time, the constituents of the ChiNext 200 Index exhibit significant growth potential. Since the base date of June 29, 2012, the top 10 weighted stocks have delivered an average return of over 1,094%, showcasing impressive performance and the potential to become future leaders of the ChiNext board.
Small-Cap Style, Focusing on ChiNext’s Growth Attributes
In addition to its distinct sector allocation compared to broad-based indices like the CSI 300, with a higher weighting in strategic emerging industries, the ChiNext 200 Index also stands out in terms of market capitalization style.
In its selection methodology, the index excludes constituents of the ChiNext Index and stocks ranked in the top 70 by average daily total market capitalization over the past six months. With a median market capitalization of only RMB 8.6 billion, the index exhibits a pronounced small-cap style. As the constituent companies progress from the introduction and growth phases to maturity, their market capitalizations are expected to expand significantly, creating the second layer of growth beta for the ChiNext 200 Index.
Currently, the ChiNext 200 Index’s market capitalization style resembles that of the ChiNext Index at its inception, closely aligning with the market capitalization level of the ChiNext Index during its early days.
Looking at the evolution of the ChiNext Index, its market capitalization distribution has generally trended upward since its base date, with a notable acceleration starting in 2019. In the future, with the rapid development of emerging industries, the ChiNext 200 Index is expected to follow a growth trajectory similar to that of the ChiNext Index, potentially benefiting from a dual boost in earnings and valuation.
Leading Earnings Growth Expectations
Backed by the dual beta of new economic momentum and small-cap style, the ChiNext 200 Index demonstrates strong growth potential and has delivered solid historical returns. According to Wind data, as of November 8, 2023, the index has risen by 63.3% over the past five years.
Moreover, Wind statistics show that the ChiNext 200 Index’s projected net profit attributable to parent company growth rates for 2024 and 2025 are 56.28% and 28.67%, respectively, ranking among the highest of major broad-based indices. This reflects a clear growth style and ample room for future earnings expansion.
Riding the upward trend of emerging industries, the ChiNext 200 Index exhibits a distinct growth style and is poised to replicate the market capitalization expansion path of the ChiNext Index.
