The SGI China A Selection Index is a systematic index aiming at tracking the performance of a basket of Chinese undervalued stocks (80 to 100) with higher growth potential based on Value and Growth factors and listed on the Shanghai and Shenzhen Stock Exchanges. The selection is advised by Fortune SG Asset Management HK.
SGI China A Selection index is based on a three step methodology applied to a baseline universe composed of the 300 biggest and most liquid A-shares listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange.
The stock selection process is performed in three steps:
- Scoring: The stocks are screened aiming at identifying undervalued stocks based on “value” factors (price earnings ratio, price-to-book ratio, dividend yield) and “growth” factors (earnings per share growth, return on equity growth, operating earnings per share growth)
- Selection: Stocks within each sector are ranked according to their score in a descending order. The top third within each sector are selected and will enter into the composition of the Index
- Weighting: The sector allocation of the index is kept similar to the baseline universe’s sector allocation. Within each sector, stocks are equally-weighted