Core Viewpoint - The Shanghai Stock Exchange and China Securities Index Co., Ltd. have decided to revise the compilation plan of the SSE 380 Index to enhance its investability Group 1: Index Compilation Changes - The sample space for the index will be revised to align with the sample space of the SSE 180 Index [1] - New investability screening criteria will be introduced, requiring a ranking in the top 90% based on average daily trading volume over the past year [1] - ESG screening criteria will be added, excluding listed companies with a China Securities ESG rating of C or below [1] Group 2: Sample Selection and Weighting - The method for selecting index samples will be revised to include securities that are not part of the SSE 180 Index and rank beyond 160 in average total market capitalization over the past year, while selecting those ranked within the top 380 [1] - Weight constraints will be implemented, limiting the weight of any single sample to a maximum of 10% and the combined weight of the top five samples to no more than 40% [1]

Core Viewpoint - The Shenzhen Stock Exchange (SZSE) announced revisions to the ChiNext Index compilation method to enhance investability and introduce an ESG negative screening mechanism, which will exclude stocks rated below B from the index [1][4]. Group 1: Index Compilation Revisions - The revisions include the introduction of an ESG negative screening mechanism to maintain the purity of sample stocks by excluding companies with significant environmental, social, and governance issues [1][4]. - A weight adjustment factor will be implemented to ensure that no single stock's weight exceeds 20% during periodic adjustments, aimed at reducing the influence of individual stocks on the index [1][2]. Group 2: Implications for the ChiNext Index - The ChiNext Index selects 100 stocks with high market capitalization and liquidity from approximately 1,380 listed companies, making inclusion prestigious for those companies [1]. - The introduction of the ESG screening mechanism is expected to enhance the investability of the index and mitigate related investment risks [1]. Group 3: Recommendations for the Shanghai Stock Exchange - The approach taken by the SZSE for the ChiNext Index could serve as a model for revising the Shanghai Composite Index, which currently suffers from distortion due to the overwhelming influence of a few large-cap stocks [4][5]. - To address the distortion in the Shanghai Composite Index, it is suggested to implement a similar exclusion mechanism for poorly rated companies and to limit the weight of individual stocks to a maximum of 1% or even 0.5% [5].