Introduction of Chinese Stock Market
BY Shiyuan, Viviana 2011-01-05 17:44:19
Stock Exchange in China
Shanghai Stock Exchange (SSE)
The Shanghai Stock Exchange (SSE) was founded on Nov. 26th, 1990 and in operation on Dec.19th the same year. It is a membership institution directly governed by the China Securities Regulatory Commission (CSRC).
After several years' operation, the SSE has become the most preeminent stock market in Mainland China in terms of number of listed companies, number of shares listed, total market value, tradable market value, securities turnover in value, stock turnover in value and the T-bond turnover in value.
As at the end of 2009, SSE boasted 1,351 listed securities and 870 listed companies, with a combined market capitalization of RMB 18,465.523 billion and a total of 89.6543 million trading accounts.
A large number of companies from key industries, infrastructure and high-tech sectors have not only raised capital, but also improved their operation mechanism through listing on Shanghai stock market.
Shenzhen Stock Exchange (SZSE)
Shenzhen Stock Exchange (SZSE)，established on 1st December 1990, is a self-regulated legal entity under the supervision of China Securities Regulatory Commission (CSRC).
SZSE is committed to its mission to develop China’s multi-tier capital market system. It gives full support to development in small and medium businesses and implementation of the national strategy of independent innovation. The SME Board was launched in May 2004. The ChiNext Market was inaugurated in October 2009.
By 30 June 2010, SZSE was home to 1,012 listed companies, with 485 on the main board, 437 on the SME board and 90 on the ChiNext market. The total market capitalization was valued at 5.6 trillion yuan (US$828.7 billion). In the first half of 2010, SZSE raised 154.3 billion yuan (US$22.7 billion) in IPO proceeds and recorded a total trading value of 9.73 trillion yuan (US$1.43 trillion).
Major Stock Indices in
SSE Composite Index
The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange.
The base day for SSE Composite Index is December 19, 1990, and the base period is the total market capitalization of all stocks of that day. The Base Value is 100. The index was launched on July 15, 1991.
The B share stocks are generally denominated in US dollars for calculation purposes. For calculation of other indices, B share stock prices are converted to RMB at the applicable exchange rate (the middle price of US dollar on the last trading day of each week) at
SZSE Component Index
The SZSE Component Index is an index of 40 stocks that are traded at the Shenzhen Stock Exchange.
The base day for SZSE Component Index is July, 20, 1994 and the base value is 1000. Only companies which meet the criteria set by the SZSE are possibly selected as constituent stock of the Index, including a long history as a listed enterprise, a market cap large enough, a positive earning scenario, being actively traded and representative in its industry or sector.
As a joint venture between the Shanghai Stock Exchanges and the Shenzhen Stock Exchange, the China Securities Index Company Limited (CSI) is a professional business entity specializing in the creation and management of indices and index-related services.
As the first equity index launched by the two exchanges together, CSI 300 aims to reflect the price fluctuation and performance of
Hang Seng Index
The Hang Seng Index is a freefloat-adjusted market capitalization-weighted stock market index in Hong Kong.
It is used to record and monitor daily changes of the largest companies of the Hong Kong stock market and is the main indicator of the overall market performance in Hong Kong. These 45 constituent companies represent about 60% of capitalisation of the Hong Kong Stock Exchange.
HSI was started on November 24, 1969, and is currently compiled and maintained by Hang Seng Indexes Company Limited, which is a wholly owned subsidiary of Hang Seng Bank, one of the largest banks registered and listed in Hong Kong in terms of market capitalisation.
A-Shares on the Shanghai and Shenzhen stock exchanges refer to those that are traded in CNY, the currency in mainland China.
In general, foreign individuals are not allowed to directly invest in A-shares as CNY is not a convertible currency and the Capital Account of China is not open yet.
However, some large foreign entities, known as QFII (Qualified Foreign Institutional Investor), are permitted by the Chinese government to buy A-shares in recent years with the trend of China's integration into the global financial system, and those QFII then put the package on another country's market traded as an ETF.
B-shares on the Shanghai and Shenzhen stock exchanges refer to those that are traded in foreign currencies. Nevertheless, foreign individuals are forbidden to trade B-shares——even with their foreign currency.
The face values of B shares are set in CNY. In Shanghai B shares are traded in US dollar, whereas in Shenzhen they are traded in Hong Kong dollar. Only some listed companies of SSE and SZES issue B-shares.
H-shares refer to the shares of companies incorporated in mainland China that are traded on the Hong Kong Stock Exchange. Many companies float their shares simultaneously on the Hong Kong market and one of the two mainland Chinese stock exchanges.
Investors, whether individual or institutional, all over the world are welcomed to trade H-Shares as they wish. However, mainland Chinese citizens are restricted to directly invest in H-shares.
As a result, price discrepancies between the H shares and the A share counterparts of the same company are not uncommon as investors trading H-shares and A-shares may differ from each other when making an buying/selling decision.
(to be continued)