CSI 300 Index: Share Price, Chart and Forecast
CSI 300 index is a project developed by the two stock exchanges in China. It measures the changes in the performance of the top 300 companies traded on the two Chinese stocks exchanges. The index thus gives access to investors and traders to the Chinese A-shares market. But what exactly is it and is it an interesting investment? Let’s take a look at this asset in detail and how to trade it.
What Is the CSI 300 Index?
Let’s first take a look at the definition and origins of this index.
CSI 300 Index Definition
CSI 300 index is a free-float capitalisation-weighted stock market index that tracks the performance of the largest 300 A-shares traded on the Shanghai Stock Exchange and the Shenzhen Stock Exchange. It thus captures 60% of the market value of the stock markets. The A-shares in the index come from industries including banking, commodities, food, transportation, real estate… Being composed of the very liquid stocks, CN300 also serves as a benchmark for the overall performance of the A-shares market in China.
The CSI 300 index components are adjusted semi-annually. The index base value is defined at 1,000 points, and this value is used in the index calculations and adjustments of market value. The formula used in the calculation considers the current total adjusted market value of constituents for the reporting period divided by a divisor. The obtained number is then multiplied with the base value of 1,000.
CSI 300 Index Today and History
CSI 300 was officially launched in April 2005, and the index base date is December 31 2004. The stability and dynamic tracking principle imply that the CSI 300 will go through regular review and adjustments. The index review is thus executed yearly, during the last ten days of May and November.
Throughout the years, CSI 300 has undergone changes in its components and adjustments in its methodology and rules. These include fast-entry rules, delisting rules, merger and acquisition rules…
For example, in December 2019, 16 changes were made to the component’s list and 19 adjustments were made based on the results from the June review. Then, the 2020 CSI 300 semi-annual review caused the deletion of 21 companies, while new 21 A-shares were added. Note that the maximum number of changes allowed in a single review is 30, or 10% of the components list.
The CSI 300 Index Price Evolution
Changes in the CSI 300 index value can be monitored in real-time during trading sessions under its ticker symbol “000300”, RIC ticker “CSI300“, and BBG ticker “SHSZ300/SHSN300”. Since its introduction, CSI 300 index price has recorded a couple of major peaks and bottoms.
CSI 300 Index Chart
The CSI 300 chart gives an overview of the movements in price since it was officially introduced.
As evident from the CSI 300 index chart, an All-Time-High price was reached in October 2007 when this index hit 5,600. However, the pressure from the global market downturn in 2008 caused the index price to dip to around 1,600 in October 2008.
After the financial crisis, CSI 300 value moves in a mild upward trajectory with significant price dips and retracements. The price formed one major peak in 2015 and two more peaks in 2021 when it climbed to a value of more than 4,800 and 5,300, respectively. The index plunged to a bottom price of around 2,170 in January 2014 and 3,000 in December 2018.
As far as the returns are concerned, China Securities Index Co. estimated that the CSI 300 index had generated an annualised 3-year return of nearly 13%, whereas its 5-year annualised return is estimated to be 7.63%. During 2018 the index recorded a negative return of around 25%, while it has generated a return of 36.07% in 2019 and 27.21% in 2020.
What Influences the Price of CSI 300 Index?
The index value may be influenced by various factors associated with the domestic and international economy. Hence, some of the major factors that have an impact on the CSI 300 value are:
- The economic growth rate of the Chinese economy
- Changes in significant economic indicators: interest rates, inflation, unemployment, debt levels of the Chinese government…
- Trade wars and trade relations with significant trade partners
- Changes in oil prices
- Exchange rate of Chinese Yuan against some of the major currencies
- The failure of pillar companies, such as Evergrande Group
- Changes in the regulatory framework which impact different industries
- Potential dangers that arise from pledging shares for loans
- The performance of individual companies / sectors in the index
- Investor’s sentiment regarding the index
The CSI 300 Index Companies and Components
The 300 A-shares comprising the index come from 10 pillar sectors, and the sum of the top 5 components by index weight is around 15%. Out of the 300 constituents, the top three stocks in terms of weight in the index are Kweichow Moutai Co Ltd, China Merchants Bank Co Ltd, and Ping An Insurance (Group) Company of China Ltd.
Looking at the exchange breakdown, over 37% of the stocks come from the Shenzhen Stock Exchange, and 63% of stocks come from Shanghai Stock Exchange. Out of the ten sectors and the 300 A-shares, around 25% of the stocks belong to the Financials sector, 15.39% are Industrials stocks, and 14.54% are Consumer Staples stocks.
For a company to be included in the index, it should satisfy certain selection criteria, some of which are:
- The company displays a solid performance
- The A-shares are listed on Shanghai or Shenzhen stock exchanges
- The company doesn’t have major financial problems
- It is not subject to regulatory actions due to violations of regulations and laws
- The stock price is not subject to substantial volatility
- There are no market manipulations of stock prices
- The listing period should be satisfied for the specific category of securities
CSI 300 Index List of Stocks
Here is a CSI 300 index company list with the top 20 components. Note that the list might change through the regular reviews and in accordance with the market value of individual companies.
|China Merchants Bank||600036||Financials|
|China Construction Bank Co||601939||Financials|
|Ping An Insurance||601318||Financials|
|Bank of China A||601988||Financials|
|China Life Insurance A||601628||Financials|
|China Petrol A||600028||Energy|
|China Yangtze Power||600900||Utilities|
|China Shenhua Energy SH||601088||Energy|
|Shanxi Xinghuacun Fen Wine||600809||Consumer Staples|
|Ping An Bank A||000001||Financials|
|Lao Jiao A||000568||Consumer Staples|
|Jiangsu Hengrui||600276||Health care|
|Bank of Communications Co Ltd||601328||Financials|
Should I Trade the CSI 300 Index? Points to Consider
Some of the reasons that make the CSI index popular among traders are as follows:
- As a Chinese stock index, the CSI 300 allows traders and investors to benefit from developments in emerging China’s economy and stock markets.
- The China Securities Index Co estimates that this index has a 1-year annualised volatility of 19%, with a 3-year volatility over 21% and 5-year volatility of over 18%.
- CSI 300 provides strong annual returns based on the index price movements.
- The index gives traders the ability to achieve high diversification by trading a well-balanced stock market portfolio, which is otherwise too costly.
- Traders can benefit from leverage offered on CSI 300 derivative instruments like CFDs.
How Can I Trade the CSI 300 (CN300)?
After getting familiar with the index, you may ask, how do I put my money in the CSI 300 index? Traders will first need to choose a broker that is regulated, safe and provides low fees. ZFX is the broker of choice for trading CSI 300 index, because it offers all these benefits and more to its clients, such as:
- Competitive trading costs and fees
- An intuitive trading platform, easy to understand even for inexperienced traders
- High leverage
- Low minimum trading amount
- Opportunity for taking long or short positions with CN300
- Traders can practise trading before opening a live account
Here is how to get started.
1 – Open an Account with ZFX
To open an account with ZFX and trade CSI 300 (CN300), you need to first go to ZFX website. Then, select “Open an account” or the “Open a Live Trading Account” through the “Accounts” section.
As you’ll notice, ZFX enables traders to open a demo account and practice trading before they put in their real money. Starting with a demo account is recommended to get familiar with the simple ZFX MT4 platform. After selecting the button to open an account, the following image appears.
To finish the account opening process, you need to provide the required information and continue with the next steps.
2 – Fund your Account
Funding your live trading account is a straightforward task, and you start by logging into your ZFX account and go to the “Deposit” section. ZFX offers multiple funding options including credit cards or Bank transfers. ZFX also removes any fees for deposits or withdrawals, usually charged by other brokers.
3 – Verify your Account
ZFX will then ask you to verify your identity by uploading a relevant document – national ID, passport, or driver’s license. Simply upload the specific scanned page as required by the ZFX verification process. You’ll also need to verify your valid bank account by providing a copy of your bank statement or bank book for instance.
4 – Start Trading on the CN300
The CSI 300 quote in real-time is available on the ZFX, as shown in the next image and on the MT4 platform.
To start trading CN300, download the suitable ZFX MT4 platform based on your device and operating system. You can then now log in with the personal username and password sent to your email. Make sure to select the right server, based on whether you open a live or demo trading account.
After you log in, find CSI 300 index under CN300 by going through the “Market Watch” section in the upper right side. When you then select the CN300, a graph with a couple of options will open on the screen. This is where you can finally buy or sell the CSI 300 index.
Tips and Things to Know Before Investing in the CSI 300 Index
Some things that you should consider when you plan to invest in CSI 300 index:
- Trading sessions for CSI 300 are Monday – Friday 09:31 – 11:30, 13:01 – 15:00 (Beijing time).
- Higher volatility during a trading session might give more opportunities for opening and closing trading positions and making profits.
- It is important also to know the review dates and announcements dates.
- There is a significant level of interest exists among scholars regarding the movement in CSI index value and associated derivative instruments. Traders can thus use this research to their advantage and gain a deeper understanding of the forces that drive index prices up or down.
- It can be useful to subscribe to newsletters that publish news and announcements related to China’s stock markets.
- Make sure you enter your CSI 300 trading journey with a clear strategy, which works for you.
CSI300 Index Future, Forecast and Predictions
The expected movements in fundamental factors and the results from the technical analysis show bullish expectations about the potential movements in CSI 300 index value. Experts anticipate that Chinese authorities will continue to loosen up the restrictive measures regarding access of foreign investments, which would positively impact the Chinese stock market. Moreover, stock market professionals expect to see a significant comeback in cyclical stocks resulting from economic recovery after the Covid-19 economic downturn. Some professionals also point out that the cyclical stocks could even break the all-time high prices, positively affecting the stock market and the CSI 300 index.
Furthermore, the anticipation of positive movements in crucial economic indicators and the possible loosening of monetary policy means that CSI 300 might experience a rise in price and form a bullish trend. UBS securities forecast that movements in the underlying factors could boost the CSI index price to a level of around 6,100, which is well above the all-time high price of 5,600. Technical indicator analysis also shows an optimistic forecast about the CSI 300 index value. Moving averages for 20,50, 100 and 200 periods plotted on a monthly chart give a buy rank for this index.
Bottom Line: Is CSI 300 a Good Investment Now?
The CSI 300 is a popular index widely used as an underlying asset in a vast number of instruments and funds. Hence, many investors carefully monitor the instrument. Based on its features and the analysis provided by experts and technical analysis, the CSI 300 index could thus be a good investment in the upcoming period.
So, interested in trading the CSI 300? If so, you can do so via the ZFX website today, as explained earlier. Indeed, this broker is regulated, easy to use and offers a wide range of assets to help you diversify your portfolio.