Shanghai Stock Exchange
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The Shanghai Stock Exchange (SSE) is a stock exchange based in the city of
Shanghai Shanghai (; , , Standard Mandarin pronunciation: ) is one of the four direct-administered municipalities of the People's Republic of China (PRC). The city is located on the southern estuary of the Yangtze River, with the Huangpu River flow ...
,
China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
. It is one of the three stock exchanges operating independently in
mainland China "Mainland China" is a geopolitical term defined as the territory governed by the People's Republic of China (including islands like Hainan or Chongming), excluding dependent territories of the PRC, and other territories within Greater China. ...
, the others being the
Beijing Stock Exchange The Beijing Stock Exchange (BSE; ) is a stock exchange based in Beijing, China. It is one of the three stock exchanges operating independently in mainland China, the others being the Shanghai Stock Exchange and the Shenzhen Stock Exchange. H ...
and the Shenzhen Stock Exchange. The Shanghai Stock Exchange is the world's 3rd largest stock market by market capitalization at US$7.62 trillion . It is also Asia's biggest stock exchange. Unlike the Hong Kong Stock Exchange, the Shanghai Stock Exchange is still not entirely open to foreign investors and often affected by the decisions of the central government, due to capital account controls exercised by the
Chinese mainland "Mainland China" is a geopolitical term defined as the territory governed by the People's Republic of China (including islands like Hainan or Chongming), excluding dependent territories of the PRC, and other territories within Greater China. ...
authorities. In 1891, Shanghai founded China's first exchange system. The current stock exchange was re-established on November 26, 1990, and was in operation on December 19 of the same year. It is a non-profit organization directly administered by the China Securities Regulatory Commission (CSRC).


History

The formation of the International Settlement (foreign concession areas) in
Shanghai Shanghai (; , , Standard Mandarin pronunciation: ) is one of the four direct-administered municipalities of the People's Republic of China (PRC). The city is located on the southern estuary of the Yangtze River, with the Huangpu River flow ...
was the result of the
Treaty of Nanking The Treaty of Nanjing was the peace treaty which ended the First Opium War (1839–1842) between Great Britain and the Qing dynasty of China on 29 August 1842. It was the first of what the Chinese later termed the Unequal Treaties. In the ...
of 1842 (which ended the First Opium War) and subsequent agreements between the Chinese and foreign governments were crucial to the development of foreign trade in
China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
and of the foreign community in Shanghai. The market for
securities A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...
trading in Shanghai begins in the late 1860s. The first shares list appeared in June 1866 and by then Shanghai's International Settlement had developed the conditions conducive to the emergence of a share market: several banks, a legal framework for
joint-stock companies A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares (certificates of ownership). Shareholders are ...
, and an interest in diversification among the established trading houses (although the trading houses themselves remained partnerships). In the 1880s and 1890s, during the boom in mining shares, foreign businessmen founded the "Shanghai Sharebrokers' Association" headquartered in Shanghai as China's first stock exchange. In 1904 the Association applied for registration in
Hong Kong Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
under the provision of the Companies ordinance and was renamed as the "Shanghai Stock Exchange". The supply of securities came primarily from local companies. In the early days, banks dominated private shares but, by 1880, only the Hong Kong and Shanghai local banks remained. Later in 1920 and 1921, "Shanghai Securities & Commodities Exchange" and "Shanghai Chinese Merchant Exchange" started operation respectively. An amalgamation eventually took place in 1929, and the combined markets operated thereafter as the "Shanghai Stock Exchange". Shipping, insurance, and docks persisted to 1940 but were overshadowed by industrial shares after the
Treaty of Shimonoseki The , also known as the Treaty of Maguan () in China and in the period before and during World War II in Japan, was a treaty signed at the , Shimonoseki, Japan on April 17, 1895, between the Empire of Japan and Qing China, ending the Firs ...
of 1895, which permitted
Japan Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
, and by extension other nations which had treaties with China, to establish factories in Shanghai and other treaty ports. Rubber plantations became the staple of stock trading beginning in the second decade of the 20th century. By the 1930s, Shanghai had emerged as the financial center of the
Far East The ''Far East'' was a European term to refer to the geographical regions that includes East and Southeast Asia as well as the Russian Far East to a lesser extent. South Asia is sometimes also included for economic and cultural reasons. The ter ...
, where both Chinese and foreign investors could trade stocks,
debenture In corporate finance, a debenture is a medium- to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest. The legal term "debenture" originally referred to a document that either creates a debt or acknowle ...
s, government bonds, and
futures Futures may mean: Finance *Futures contract, a tradable financial derivatives contract *Futures exchange, a financial market where futures contracts are traded * ''Futures'' (magazine), an American finance magazine Music * ''Futures'' (album), a ...
. The operation of Shanghai Stock Exchange came to an abrupt halt after
Japanese Japanese may refer to: * Something from or related to Japan, an island country in East Asia * Japanese language, spoken mainly in Japan * Japanese people, the ethnic group that identifies with Japan through ancestry or culture ** Japanese diaspor ...
troops occupied the Shanghai International Settlement on December 8, 1941. In 1946, the Shanghai Stock Exchange resumed its operations before closing again 3 years later in 1949, after the
Communist revolution A communist revolution is a proletarian revolution often, but not necessarily, inspired by the ideas of Marxism that aims to replace capitalism with communism. Depending on the type of government, socialism can be used as an intermediate stag ...
took place. After the
Cultural Revolution The Cultural Revolution, formally known as the Great Proletarian Cultural Revolution, was a sociopolitical movement in the People's Republic of China (PRC) launched by Mao Zedong in 1966, and lasting until his death in 1976. Its stated goa ...
ended and
Deng Xiaoping Deng Xiaoping (22 August 1904 – 19 February 1997) was a Chinese revolutionary leader, military commander and statesman who served as the paramount leader of the People's Republic of China (PRC) from December 1978 to November 1989. After CCP ...
rose to power, China was re-opened to the outside world in 1978. During the 1980s, China’s securities market evolved in tandem with the country's economic reform and opening up and the development of
socialist market economy The socialist market economy (SME) is the economic system and model of economic development employed in the People's Republic of China. The system is a market economy with the predominance of public ownership and state-owned enterprises. The ...
. On 26 November 1990, the Shanghai Stock Exchange was re-established and operations began a few weeks later on 19 December. In 2019, the Shanghai Stock Exchange launched the STAR Market, featuring only technology-related companies, as a rival to the NASDAQ.


Chronology

*1866 – The first share list appeared in June. *1871 – Speculative bubble burst triggered by monetary panic. *1883 – Credit crisis resulted speculation in Chinese companies. *1890 – Bank crisis started from Hong Kong. *1891 – "Shanghai Sharebrokers Association" established. *1895 – Treaty of Shimonoseki opened Chinese market to foreign investors. *1904 – Renamed to "Shanghai Stock Exchange". *1909–1910 – Rubber boom. *1911 – Revolution and the abdication of the
Qing dynasty The Qing dynasty ( ), officially the Great Qing,, was a Manchu-led imperial dynasty of China and the last orthodox dynasty in Chinese history. It emerged from the Later Jin dynasty founded by the Jianzhou Jurchens, a Tungusic-speak ...
. Founding of the Republic of China. *1914 – Market closed for a few months due to the
Great War World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, the United States, and the Ottoman Empire, with fightin ...
(World War I). *1919 – Speculation in cotton shares. *1925 – Second rubber boom. *1929 – "Shanghai Securities & Commodities Exchange" and "Shanghai Chinese Merchant Exchange" were merged into the existing Shanghai Stock Exchange. *1931 – Incursion of Japanese forces into northern China. *1930s – The market was dominated by the rubber share price movements. *1941 – The market closed on Friday, 5 December. Japanese troops occupied Shanghai. *1946–1949 – Temporary resumption of the Shanghai Stock Exchange until the
communist revolution A communist revolution is a proletarian revolution often, but not necessarily, inspired by the ideas of Marxism that aims to replace capitalism with communism. Depending on the type of government, socialism can be used as an intermediate stag ...
. Founding of the
People's Republic of China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
in 1949. *1978 –
Deng Xiaoping Deng Xiaoping (22 August 1904 – 19 February 1997) was a Chinese revolutionary leader, military commander and statesman who served as the paramount leader of the People's Republic of China (PRC) from December 1978 to November 1989. After CCP ...
emerged as the dominant figure in China's leadership, thus beginning a period of 'opening up' to the rest of the world. *1981 – Trading in treasury bonds was resumed. *1984 – Company stocks and corporate bonds emerged in Shanghai and a few other cities. *1990 – The present Shanghai Stock Exchange re-opened on November 26 and began operation on December 19. *1992 – Deng Xiaoping's Southern Tour saved China's capital market and the two stock exchanges (the other is Shenzhen Stock Exchange) *1997 – The State Council of China decided that the Shanghai Stock Exchange would be directly managed by the China Securities Regulatory Commission. *2001–2005 – A four-year market slump which saw Shanghai’s market value halved, after reaching a peak in 2001. A ban on new
IPOs In demonology, Ipos is an Earl and powerful Prince of Hell (a Duke to some authors) who has thirty-six legions of demons under his command. He knows and can reveal all things, past, present and future (only the future to some authors, and past ...
was put in April 2005 to curb the slump and allow more than US$200 billion of mostly state-owned equity to be converted to tradable shares. *2006 – The SSE resumed full operation as the yearlong ban on IPOs was lifted in May. The world’s second largest (US$21.9 billion) IPO by the Industrial and Commercial Bank of China (ICBC) was launched in both Shanghai and Hong Kong stock markets. *2007–2008 – A "stock market frenzy" as speculative traders rush into the market, making China’s stock exchange temporarily the world's second largest in terms of turnover. After reaching an all-time high of 6,124.044 points on October 16, 2007, the benchmark Shanghai Composite Index ended 2008 down a record 65% mainly due to the impact of the global economic crisis which started in mid-2008. *2010 –
Agricultural Bank of China Agricultural Bank of China (ABC), also known as AgBank, is one of the " Big Four" banks in China. It was founded on 10 July 1951, and has its headquarters in Dongcheng District, Beijing. It has branches throughout mainland China, Hong Kong, ...
completed the world’s largest IPO to date worth US$22.1 billion. *2015 – height variations on stocks’ values, with solid raise in early 2015 followed by −30% fall in June–July. *2019 – Launched the STAR Market.


Structure

The securities listed at the SSE include the three main categories of stocks, bonds, and
funds Funding is the act of providing resources to finance a need, program, or project. While this is usually in the form of money, it can also take the form of effort or time from an organization or company. Generally, this word is used when a firm uses ...
. Bonds traded on SSE include
treasury bond United States Treasury securities, also called Treasuries or Treasurys, are government debt instruments issued by the United States Department of the Treasury to finance government spending as an alternative to taxation. Since 2012, U.S. gov ...
s (T-bond), corporate bonds, and convertible corporate bonds. SSE T-bond market is the most active of its kind in China. There are two types of stocks being issued in the Shanghai Stock Exchange: "A" shares and "B" shares. A shares are priced in the local renminbi yuan currency, while B shares are quoted in
U.S. dollar The United States dollar ( symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the officia ...
s. Initially, trading in A shares are restricted to domestic investors only while B shares are available to both domestic (since 2001) and foreign investors. However, after reforms were implemented in December 2002, foreign investors are now allowed (with limitations) to trade in A shares under the Qualified Foreign Institutional Investor (QFII) program which was officially launched in 2003. Currently, a total of 98 foreign institutional investors have been approved to buy and sell A shares under the QFII program. Quotas under the QFII program were US$30 billion and increased to US$80 billion as of April, 2012. There has been a plan to eventually merge the two types of shares in the future. The SSE is open for trading every Monday to Friday from 09:15 to 15:00. The morning session begins with centralized competitive pricing from 09:15 to 09:25, and continues with consecutive bidding from 09:30 to 11:30. This is followed by the afternoon consecutive bidding session, which starts from 13:00 to 14:57. The centralized competitive pricing starts again from 14:57 to 15:00. The market is closed on Saturday and Sunday and other holidays announced by the SSE.


Indices

The SSE Composite (also known as Shanghai Composite) Index is the most commonly used indicator to reflect SSE's market performance. Constituents for the SSE Composite Index are all listed stocks (A shares and B shares) at the Shanghai Stock Exchange. The Base Day for the SSE Composite Index is December 19, 1990. 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. At the end of 2006, the index reaches 2,675.47. Other important indexes used in the Shanghai Stock Exchanges include the SSE 50 Index and SSE 180 Index.


SSE's Top 10 Largest Stocks

''Source: Shanghai Stock ExchangeShanghai Stock Exchange
Market Value
Aug 27 2020.
(market values in RMB/Chinese Yuan). Data arranged by market value. Updated on Aug 27 2020.''
#
Kweichow Moutai Kweichow Moutai Co., Ltd. is a partial publicly traded, partial state-owned enterprise in China, specializing in the production and sales of the spirit Maotai baijiu, together with the production and sale of beverage, food and packaging materi ...
(2,174 billion) # Industrial and Commercial Bank of China (1,339 billion) #
Agricultural Bank of China Agricultural Bank of China (ABC), also known as AgBank, is one of the " Big Four" banks in China. It was founded on 10 July 1951, and has its headquarters in Dongcheng District, Beijing. It has branches throughout mainland China, Hong Kong, ...
(1,027 billion) #
China Life China Life Insurance Company Limited (short China Life, ) is a Beijing-headquartered China-incorporated company that provides life insurance and annuity In investment, an annuity is a series of payments made at equal intervals.Kellison, Step ...
(897 billion) #
Ping An Insurance Ping An Insurance known also as Ping An of China (), full name Ping An Insurance (Group) Company of China, Ltd. is a Chinese holding conglomerate whose subsidiaries provide insurance, banking, asset management, financial, healthcare services. ...
(829 billion) #
China Merchants Bank China Merchants Bank (CMB) () is a Chinese bank headquartered in Futian District, Shenzhen, Guangdong, China. Founded in 1987, it is the first share-holding commercial bank wholly owned by corporate legal entities in China. CMB has over five hun ...
(761 billion) # PetroChina (717 billion) #
Bank of China The Bank of China (BOC; ) is a Chinese majority state-owned commercial bank headquartered in Beijing and the fourth largest bank in the world. The Bank of China was founded in 1912 by the Republican government as China's central bank, repl ...
(691 billion) # Haitian Flavouring & Food (593 billion) #
Hengrui Medicine Jiangsu Hengrui Pharmaceuticals Company Ltd. (), also known as Jiangsu Hengrui (), is a Chinese pharmaceutical company that manufactures and distributes various types of drug packaging materials, cancer-treating antineoplastics, cardiovascular me ...
(499 billion)


Listing requirements

According to the regulations of Securities Law of the People’s Republic of China and Company Law of the People’s Republic of China, limited companies applying for the listing of shares must meet the following criteria: *The shares must have been publicly issued following approval of the State Council Securities Management Department. *The company’s total share capital must not be less than RMB 30 million. *The company must have been in business for more than 3 years and have made profits over the last three consecutive years. This requirement also applies to former state-owned enterprises reincorporating as private or public enterprises. In the case of former state-owned enterprises re-established according to the law or founded after implementation of the law and if their issuers are large and medium state owned enterprises, it can be calculated consecutively. The number of shareholders with holdings of values reaching in excess of RMB 1,000 must not be less than 1,000 persons. Publicly offered shares must be more than 25% of the company’s total share capital. For company whose total share capital exceeds RMB 400 million, the ratio of publicly offered shares must be more than 15%. *The company must not have committed any major illegal activities or false accounting records in the last three years. Other conditions stipulated by the State Council. *China currently has a preference for domestic firms only to list onto their stock exchanges; India has similar rules. However, China considered opening up their capital markets to foreign firms in 2010. The conditions for applications for the listing of shares by limited companies involved in high and new technology are set out separately by the State Council.


Building

The SSE is housed at the Shanghai Securities Exchange Building since 1997.


See also

* China Securities Regulatory Commission * Economy of China * Hong Kong Stock Exchange * Shenzhen Stock Exchange *
Shanghai Metal Exchange The Shanghai Futures Exchange (SHFE; ) was formed from the amalgamation of the national level futures exchanges of China, the Shanghai Metal Exchange, Shanghai Foodstuffs Commodity Exchange, and the Shanghai Commodity Exchange in December 1999. It i ...
*
SSE Composite The SSE Composite Index also known as SSE Index is a stock market index of all stocks ( A shares and B shares) that are traded at the Shanghai Stock Exchange. There are also SSE 180, SSE 50 and SSE Mega-Cap Indexes for top 170, 50 and 20 compa ...
* Untraded shares * Leading stock * Deng Xiaoping's Southern Tour


Lists

*
List of Chinese companies Since the introduction of economic reforms in 1978, China has become one of the world's fastest-growing major economies. , it was the world's second-largest economy by nominal GDP and largest by purchasing power parity (PPP). China was also th ...
*
List of companies in the People's Republic of China Since the introduction of economic reforms in 1978, China has become one of the world's fastest-growing major economies. , it was the world's second-largest economy by nominal GDP and largest by purchasing power parity (PPP). China was also ...
* List of stock exchanges


References


External links

* {{Authority control Economy of Shanghai Stock exchanges in China Companies based in Shanghai Financial services companies established in 1866 Financial services companies established in 1990 Chinese companies established in 1866 Chinese companies established in 1990