The Shanghai Stock Exchange (SSE) is one of two regularly operating and organized securities and derivatives markets in the People's Republic of China. The second trading floor is located in Shenzhen. The Shanghai Stock Exchange is the fifth largest securities market in the world in terms of total capitalization. In May 2015, that figure was $5.5 trillion. Unlike the Hong Kong exchange, the Shanghai exchange is not fully open to foreign investors due to the tight control of capital flows by the authorities in mainland China.
At a Glance
Let's consider the main parameters of this organized securities trading platform:
- Type - stock exchange.
- Location - Shanghai city in China.
- Founded in 1990, November 26.
- Key figures - Jeng Liang (Chairman), Zhang Yujun (President).
- Currency - yuan(RMB).
- Number of listings - 1041 (as of May 2015).
- Volume - $0.5 trillion (December 2009).
- Indicators - an index called SSE Composite and its derivatives.
Purpose and place
The Shanghai Stock Exchange was opened in 1990 and started operating in just three weeks. It is a non-profit organization administered through the China Securities Regulatory Commission (CSRC). The Shanghai Stock Exchange provides secure interaction between financial entities and efficient clearing. It is also the international analogue of interdepartmental communication and cooperation. The Shanghai Exchange is responsible for the centralized clearing of foreign exchange in the interbank market, including margin and collateral management, information and consulting management.
History of Creation
The formation of the system of international payments in Shanghai was the result of the Nankinking Agreement, concluded in 1842. It was his signing that ensured the end of the first Opium War. The history of the securities market in China began in the late 1860s. During the boom in mining stocks, foreign businessmen founded the Shanghai Stock Brokers Association. In 1904 it was renamed the Stock Exchange. The offer of securities in that period was provided mainly by local companies. Since 1895, Japan and some other states that had treaties with China received the right to establish their factories in Shanghai and other ports. Rubberplantations became a staple of stock trading in the late 20th century.
By the late 1930s, Shanghai had become the financial center of the Far East, where Chinese and foreign investors could trade stocks, government and corporate bonds, and futures. The functioning of the exchange stopped abruptly when the territory of the state was occupied by Japanese troops on December 8, 1941. However, five years later, it fully restored its activities. Three years later, the Shanghai Stock Exchange closed again due to the communist revolution in China. It opened only after 32 years. This was made possible by the Cultural Revolution and the rise to power of Deng Xiaoping. Throughout the 1980s, China's securities market developed against the backdrop of economic reforms that signaled a gradual transition from a socialist to a market economy. In its present form, the Shanghai Stock Exchange began operating on December 19, 1990.
Structure
Securities traded on the Shanghai Exchange are divided into three categories: bonds, stocks and cash funds. The first is treasury, corporate and convertible bonds. There are two types of shares: "A" and "B". The nominal value of the first is expressed in yuan, the second - in US dollars. Initially, Type A shares could only be issued by national firms. However, since December 2002, foreign investors have been allowed to trade them, albeit with restrictions. In 2003, a program called "Qualifiedforeign institutional investors”. At the moment, 98 foreign entities have been admitted, the quota for entering the market is 30 billion US dollars. There are plans to combine both types of shares in the future.
Working hours
Shanghai Stock Exchange operates from Monday to Friday. The morning session starts with centralized pricing from 9:15 to 9:25. Bidding takes place from 9:30 to 11:30 and from 13:00 to 15:00. The exchange is closed on Saturdays and Sundays, other holidays are announced in advance. Major holidays include: International and Chinese New Year, Qingming Festival, Duanwu and Mid-Autumn Festival, Labor Day, National Day.
Listing requirements
The rules for listing shares on the stock exchange are regulated in China by two laws: "On Securities" and "On Companies". The listing requirements for shares include the following items:
- Shares must be issued to the public after approval by the State Department of Securities Management.
- Their total face value should not be less than 30 million yuan.
- During the last three years, the company should finish the financial year with a surplus. At the same time, the state can own no more than 75% of the shares (if the total nominal value exceeds 400 million US dollars, then 85% is allowed).
- Company must not engage in illegal activities or falsify accounting records in the past three years.
Other conditions providedState Council include the following restrictions:
- Currently, China favors domestic firms that want to list their shares on the stock exchange. Similar restrictions apply, for example, in India.
- New technology companies are separately approved by the State Council.
Shanghai Exchange Quotes
SSE Composite is the main indicator of the functioning of the Chinese securities market. It is calculated on the basis of a weighted composite Paasche price index. This means that the Shanghai Exchange index is based on a specific day. This date is December 19, 1990. Based on the market capitalization of all stocks on that day. The base value of the index is 100 points. Its calculation has been carried out since July 15, 1991. The SSE Composite Index is equal to the current market capitalization of all stocks multiplied by the underlying value. Its peak value was recorded on July 6, 2015 - 5166.35. The fall of the Shanghai Stock Exchange occurred shortly after that. A month and a half later, on August 22, 2015, the mentioned figure was 3509.98 units. Exchange quotations decreased 1.5 times. Other important indices of the Shanghai Stock Exchange are SSE 50 and SSE 180. As of November 23, 2015, the indicator was 3610.31, compared to the previous day, stock quotes fell by 0.56 points.
The Shanghai Stock Exchange is one of two securities trading platforms in China. Statecontinues to exercise close control over it. Its conjuncture is assessed using the SSE Composite index, as well as a number of indicators based on it.
