Shanghai Stock Exchange
| Shanghai Stock Exchange | |
| |
| Founded | 1990 |
|---|---|
| Headquarters | Shanghai, China |
| Key People | Wu Qing, Chairman |
| Products | Cash equities, bonds and ETFs, warrants |
| Website | www.sse.com |
The Shanghai Stock Exchange (SSE) is the largest stock exchange in China by market capitalization, outstripping its rival the Shenzhen Stock Exchange. The SSE has grown rapidly over the past decade and introduced new rules allowing foreign shares to become listed.
In 2014 there were 997 listed stocks on SSE with a total market capitalization of RMB 15,116.53 billion.
The Shanghai Stock Exchange and BM&F Bovespa, Latin America’s biggest exchange operator, announced in February of 2011 that they would sign an agreement that would lead to the cross-listings of stocks.[1]
On November 5, 2018 Chinese President Xi Jinping announced a new “technology innovation board,” to be established by the Shanghai Stock Exchange, as Beijing takes steps to mitigate the impact of the trade war between the U.S. and China.[2] The new venue will be designed to make it easier for high-tech companies to access funding for IPOs and would potentially compete with Hong Kong or even the NYSE. [3]
Background[edit]
The SSE was founded on Nov. 26, 1990 and started trading operations on Dec. 19, 1990 under the supervision of the China Securities Regulatory Commission (CSRC). It quickly became the dominant stock-trading market in China in all measures including total trading volume, market capitalization and total securities turnover.[4]
In the period 2004 to 2007, the SSE's domestic market capitalization rose from US$314.3 billion to US$3.7 trillion while average daily turnover rose from US$1.3 billion to US$16.8 billion and value of shares traded jumped from US$322.8 billion to US$4.07 trillion.[5]
After sliding sharply following the 2008 global financial crisis the SSE's market capitalization recovered, rising some 81.2 percent in the 12 months to October 2009 from US$1.6 trillion to US$2.4 trillion, according to the World Federation of Exchanges.[6] The SSE adopted its New Generation Trading System in November 2009 and simultaneously enforced additional supervision over accounts prone to speculation on new stocks.[7]
Product Development[edit]
The SSE hosts products, including A-Shares, B-Shares, securities investment funds, spot T-bond, T-bond repos, and convertible bonds.[8] The SSE's main benchmark products include the whole-market SSE Composite Index, the performance benchmark SSE 180 Index and the large cap SSE 50 Index.
In December 2014 SSE and the China Securities Regulatory Commission separately published draft rules for trading of stock options, giving the public until early January 2015 to comment. Chinese regulators said they plan to launch a series of stock and commodity options in 2015, and exchanges have already begun conducting simulated trading for some contracts.[9]
On Jan. 9, 2015 the Chinese regulator said SSE would launch simulated trading of stock options on 50 exchange traded funds, and is expected to expand that to individual blue-chip stocks.[10] The Shanghai Stock Exchange mandates that individual investors have a minimum 500,000 Chinese yuan in cash and shares in a single account for trading options. Although China has around 50 million active equity trading accounts, only about 5 percent of these can meet that standard.[11]
Key People[edit]
- Wu Qing, Chairman
- Huang Hongyuan, President
- Liu Xiaodong, Vice President
Joint Ventures and Alliances[edit]
In November of 2009 the SSE planned to list several Chinese companies known as "red chips" (that currently list on foreign exchanges) and foreign companies by late 2010, according to officials from the China arm of investment firm J.P. Morgan.[12] The SSE is currently still drafting rules for listing overseas shares on the bourse while NASDAQ OMX group and NYSE Euronext have also shown interest. Chinese oil giant CNOOC, China Mobile and global banking group HSBC are expected to be among the first such companies to list on the SSE.
In April 2010, the Shanghai Stock Exchange and the Shenzhen Stock Exchange began allowing some local brokers to short sell and trade on margin for the first time. Brokerages Guosen, Citic, Haitong, Guotai Junan, GF and Everbright will participate in the trial program.[13] Capital markets analysts believe the decision to allow margin trading and short selling is linked to China's introduction index futures on its equities markets in mid-April. They believe the move is a way to ease the market into products like stock index futures that require even greater liquidity and carry higher risk.[14]
In May 2014 the exchange entered into a content licensing agreement with Options Industry Council (OIC) to create an educational program for financial professionals and investors in China.[15]
On October 9, 2014, Reuters reported that the Shanghai Stock Exchange and Deutsche Boerse were set to sign a "wide-ranging cooperation" arrangement that would give Chinese investors direct access to the German and European financial market.[16]
On November 17, 2014, trading began on Stock Connect, a program that links the Shanghai Stock Exchange and Hong Kong Exchanges and Clearing Ltd, allowing residents of mainland China to trade shares in Hong Kong for the first time and foreigners to invest in Chinese companies.[17]
In June 2019 the London Stock Exchange and Shanghai Stock Exchange's Shanghai-London Stock Connect went live, allowing investors to access and trade one another's stock listings on their respective markets. In other words, foreign companies are able to list on the Shanghai Stock Exchange while Chinese listed companies are able to raise capital through fungible instruments on the London Stock Exchange. The historic link marked the first time Chinese investors could trade international stocks within China without domestic capital controls and international investors could access China A-Shares from outside the country on the London Stock Exchange, using international trading and settlement systems.
The linking mechanism's first listing was on June 17, 2019 with Hautai Securities, a securities company in China, as the first issuer to list global depository receipts (GDRs) on the London Stock Exchange. The firm raised $1.54 billion, marking the first time international investors were given access to China A-shares on an exchange outside China.[18][19] United Kingdom and Chinese officials touted the link as "ground breaking" and would deepen "global connectivity."[20]
On January 2, 2020, China decided to suspend the Shanghai-London tie-up temporarily on political grounds, one issue reportedly being Britain’s stance on the pro-democracy protests in Hong Kong.[21]
On June 25, 2019, Japan Exchange Group and the Shanghai Stock Exchange launched Japan-China ETF Connectivity, a joint program that allows joint listings of exchange traded funds (ETF)s. There have been Chinese ETFs listed in Japan prior to the program, but this marks the first time Japanese ETFs were listed in China.[22]
The Star Market[edit]
On July 22, 2019, shares began trading on the Shanghai Stock Exchange’s Science and Technology Innovation Board, aka The Star Market. The Star Market was announced by president Xi Jinping in 2018 and has been called China’s answer to Nasdaq.[23] Shares on the science and technology-focused equities market surged up to 520% on its first day.
Starting in March 2019, more than 149 companies applied to list on The Star Market, including software and robotics makers and biotech companies. China’s securities regulators approved 28 listing applications following exchange reviews, with 25 having completed their IPOs. Those 25 raised a combined 37 billion yuan ($5.4 billion).[24]
References[edit]
- ↑ Shanghai forges bourse link with Brazil. FT.com.
- ↑ China to Create Stock Venue in Shanghai for High-Tech Companies. Bloomberg News.
- ↑ Shanghai to launch new tech board potentially competing with HK. Reuters.
- ↑ Brief Introduction to SSE. Shanghai Stock Exchange.
- ↑ Shanghai Stock Exchange. Wikinvest.
- ↑ Latest Statistics. World Federation of Exchanges.
- ↑ News. Shanghai Stock Exchange.
- ↑ Trading Summaries. Shanghai Stock Exchange.
- ↑ China publishes draft rules on stock options, signals launch is near. Reuters.
- ↑ China derivatives push gathers steam. The Financial Times.
- ↑ A Detailed Look Into China's Options Market. Investopedia.
- ↑ JP Morgan sees overseas firms listing in China soon. Reuters.
- ↑ Launch of Margin Trading, Short Selling. China Daily.
- ↑ China Rolls Out Margin Trading, Short Selling. Wall Street Journal.
- ↑ The Options Industry Council Signs Content Sharing Agreement with The Shanghai Stock Exchange. The Options Industry Council.
- ↑ Deutsche Boerse set for wide-ranging cooperation with SSE -sources. Reuters.
- ↑ Link Opens Between Hong Kong and Shanghai Stock Markets. The New York Times.
- ↑ Shanghai-London Stock Connect. Press Release.
- ↑ Long-awaited London-Shanghai share listing project goes live. Reuters.
- ↑ First Chinese-listed company launches on London Stock Exchange. Yahool Finance.
- ↑ China Puts U.K. on Guard as Johnson Ponders His Huawei Decision. Bloomberg.
- ↑ Ceremonies to Commemorate Launch of Japan-China ETF Connectivity. JPX.
- ↑ Shares on China tech exchange surge up to 520% in trading debut. The Financial Times.
- ↑ Stocks Surge on First Day for China’s Latest Answer to Nasdaq. The Wall Street Journal.