ChiNext Index: A New Chapter in China's Tech-Innovation

The ChiNext Index will adjust its methodology on June 16, with a 20% cap on stock weights and ESG screenings. The index focuses on innovative firms and tracks $16.1 billion in assets. Modifications will emphasize sectors like tech and healthcare, enhancing its global alignment and appeal to international investors.

The ChiNext Index, a key player in China's financial markets, is set to undergo significant methodology changes starting June 16. The adjustments include imposing a 20% cap on individual stock weights and implementing an ESG negative screening mechanism. These changes aim to spotlight high-growth and innovative enterprises, further aligning the index with international standards.

As of June 10, more than US$16.1 billion in assets are tied to ETFs tracking the ChiNext Index. Leading this group is the E Fund ChiNext ETF (159915), holding US$11.6 billion under management by E Fund Management, China's largest mutual fund manager. These changes mark the 53rd revision since the index's inception in 2010, underscoring its role in China's economic evolution.

The revised index will focus more on emerging sectors such as new-generation information technology, new energy vehicles, and healthcare. In Q1 2025, constituent companies reported a 9.5% revenue growth year-on-year, showcasing significant achievements in AI chips, EV batteries, and precision medicine. The reforms also look to mitigate concentration risks while attracting increased international engagement through mechanisms like Stock Connect.

(With inputs from agencies.)