China’s Shenzhen Stock Exchange will start changing how it weights ChiNext Index constituents on Dec. 14, beginning a transition toward a 15% ceiling for any one stock.
The exchange said the revised method will take effect at the index’s next regular adjustment. At the end of the transition, no constituent will exceed the exchange’s 15% weighting ceiling.
The rollout rules bar upward adjustments to either the stock limit or its adjustment factor. The exchange’s notice sets the end point at a largest constituent’s actual index weight of 14.5% or less, which it says achieves the 15% cap.
A stock’s weight determines how strongly its performance affects the benchmark. The ChiNext change sets a limit on how much any one company can account for in the index. The 14.5% figure is the largest constituent’s actual weight at the transition’s end; 15% is the cap target described by the exchange.
Implementation starts at the Dec. 14 regular adjustment.
