China's Wildest Stock Gauge Is Now Ready for Its Close Up

(Bloomberg) -- Global investors, meet China’s most topsy-turvy stock gauge.

When MSCI Inc. decided to expand the weighting of China equities in its benchmark indexes, it also announced it would add ChiNext Index members for the first time, something MSCI said it would consider last year. The decision involving 27 stocks means index-tracking investors will be obliged to hold them.

The 100-member gauge of mostly small-cap and technology stocks in the southern tech hub of Shenzhen is notoriously turbulent, and often rises and falls depending on the availability of liquidity in China’s markets. In its eight-year history, the gauge has soared more than 82 percent twice. In three other years, it’s slid at least 27 percent.

Though the ChiNext is tech-heavy, it represents a range of industries, from biotech to eye care. The stock with the heaviest weighting is Contemporary Amperex Technology Co., the world’s biggest maker of batteries used in electric vehicles. The No. 2 firm is in a more traditional field: Wens Foodstuffs Group Co. processes and sells meat products.

The ChiNext rose 2.1 percent at the close on Friday. It jumped a record 25 percent last month.

©2019 Bloomberg L.P.