The constituent stocks of the CSI 300 and CSI 500 index are adjusted twice a year. We recently added the CSI 500 Index Fund, so this post will talk about the adjustment of the constituent stocks of the CSI 500 Index, hoping to help readers.

On the next trading day, the constituent stocks of CSI 500 Index are updated as follows:

1. Replaced 50 constituent stocks, and transferred some stocks that have increased greatly in the past six months, such as Jingsheng Electromechanical and Tianci Materials. At the same time, some stocks transferred from CSI 1000 and CSI 300 have been included in the index, such as Tong Yuan Expressway and Wanda Cinema.

2. In the share transfer industry, medicine, non-bank finance and electronics occupy the top three positions respectively. In the transferred stock industry, chemical industry, media and electrical equipment (related to new energy) occupy the top three positions respectively.

3. After the replacement of constituent stocks, the weights of information technology and pharmaceutical industries in the CSI 500 Index have increased, while the weights of new energy and raw materials have decreased. Many stocks in the raw materials industry are cyclical stocks, so the distortion of P/E ratio will be corrected after this adjustment. Before the update, the top three industries were raw materials, industry and information technology, and after the update, the ranking was changed to information technology, raw materials and industry.

4. The average P/E ratio of transferred constituent stocks is 86 times, and that of transferred constituent stocks is 73 times. After the update, the P/E ratio of CSI 500 Index will further decline. In June, the updated valuation of the constituent stocks of the index once declined.