Shanghai Composite Index, or sometimes referred to as SSE Composite or SSEC (SSE stands for Shanghai Stock Exchange), is the total of all A shares and B shares that are traded on the Shanghai Stock Exchange. The SSEC uses a Paasche weighted formula to calculate price, which means the market capitalization is multiplied by the quotient of the base value over the base period.
The Shanghai stock exchange is one of China’s leading markets, with other significant trading at the Shenzhen stock exchange and Hong Kong’s Hang Seng. By market capitalization, the Shanghai exchange is 5th largest in the world. Along with the Shenzhen stock exchange, the Shanghai stock exchange are the two exchanged that are independently operating on mainland China. The constituents of the Shanghai stock exchange are diverse, from finance to energy companies. Some notable companies that make up the Shanghai composite include the Bank of China, PetroChina, and Tianjin Port.
The Shanghai Composite index calculates the total value of A shares and B shares, available on the stock exchange. A shares are denominated in yuan and are limited to purchase only by Chinese traders. In contrast, B shares are denominated in foreign currencies (Hong Kong Dollar for the Shenzhen and US Dollar for the Shanghai).