The Shanghai Stock Exchange (SSE) is a
stock exchange
A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for th ...
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 flowin ...
,
China. 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 Chin ...
, 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 Shenzhen Stock Exchange (SZSE; ) is a stock exchange based in the city of Shenzhen, in the People's Republic of China. It is one of three stock exchanges operating independently in Mainland China, the others being the Beijing Stock Exch ...
. 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 Stock Exchange of Hong Kong (SEHK, also known as Hong Kong Stock Exchange) is a stock exchange based in Hong Kong. As of the end of 2020, it has 2,538 listed companies with a combined market capitalization of HK$47 trillion. It is rep ...
, 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 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
The China Securities Regulatory Commission (CSRC) is a government ministry of the State Council of the People's Republic of China
The State Council, constitutionally synonymous with the Central People's Government since 1954 (particu ...
(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 flowin ...
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 wa ...
of 1842 (which ended the
First Opium War
The First Opium War (), also known as the Opium War or the Anglo-Sino War was a series of military engagements fought between Britain and the Qing dynasty of China between 1839 and 1842. The immediate issue was the Chinese enforcement of the ...
) and subsequent agreements between the Chinese and foreign governments were crucial to the development of foreign trade in
China 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 fo ...
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, 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 Delta i ...
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 First ...
of 1895, which permitted
Japan, 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 te ...
, 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 acknowl ...
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 go ...
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 China, People's Republic of China (PRC) from December 1978 to November 1989. Aft ...
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
The Nasdaq Stock Market () (National Association of Securities Dealers Automated Quotations Stock Market) is an American stock exchange based in New York City. It is the most active stock trading venue in the US by volume, and ranked second ...
.
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
Taiwan, officially the Republic of China (ROC), is a country in East Asia, at the junction of the East and South China Seas in the northwestern Pacific Ocean, with the People's Republic of China (PRC) to the northwest, Japan to the northea ...
.
*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 List of countries and dependencies by population, most populous country, with a Population of China, population exceeding 1.4 billion, sli ...
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 China, People's Republic of China (PRC) from December 1978 to November 1989. Aft ...
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
A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of saver ...
and the two stock exchanges (the other is
Shenzhen Stock Exchange
The Shenzhen Stock Exchange (SZSE; ) is a stock exchange based in the city of Shenzhen, in the People's Republic of China. It is one of three stock exchanges operating independently in Mainland China, the others being the Beijing Stock Exch ...
)
*1997 – The
State Council of China
The State Council, constitutionally synonymous with the Central People's Government since 1954 (particularly in relation to local governments), is the chief administrative authority of the People's Republic of China. It is chaired by the pr ...
decided that the Shanghai Stock Exchange would be directly managed by the
China Securities Regulatory Commission
The China Securities Regulatory Commission (CSRC) is a government ministry of the State Council of the People's Republic of China
The State Council, constitutionally synonymous with the Central People's Government since 1954 (particu ...
.
*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 a ...
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
Industrial and Commercial Bank of China Limited (ICBC; ) is a Chinese multinational bank.
Founded as a limited company on 1 January 1984, ICBC is a state-owned commercial bank. With capital provided by the Ministry of Finance of China, th ...
(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
Turnover or turn over may refer to:
Arts, entertainment, and media
*''Turn Over'', a 1988 live album by Japanese band Show-Ya
* Turnover (band), an American rock band
*"Turnover", a song on Fugazi's 1990 album '' Repeater''
*''Turnover'', a Japane ...
. 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 Global economic crisis may refer to:
*Economic events of the 21st Century:
**Financial crisis of 2007–2008
** Great Recession
**The 2020 stock market crash
*A global recession
*Earlier global economic events, such as:
**The Great Depression, a glo ...
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, Lond ...
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
stock
In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...
s,
bonds, and
funds. 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 bond
A corporate bond is a bond issued by a corporation in order to raise financing for a variety of reasons such as to ongoing operations, M&A, or to expand business. The term is usually applied to longer-term debt instruments, with maturity o ...
s, 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. dollars. 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 180 Index is the stock index of Shanghai Stock Exchange, representing the top 180 companies by "float-adjusted" capitalization and other criteria. SSE 180 is a sub-index of SSE Composite Index, the latter included all shares of the exchange.
...
.
SSE's Top 10 Largest Stocks
''Source: Shanghai Stock Exchange[Shanghai 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 (2,174 billion)
#
Industrial and Commercial Bank of China
Industrial and Commercial Bank of China Limited (ICBC; ) is a Chinese multinational bank.
Founded as a limited company on 1 January 1984, ICBC is a state-owned commercial bank. With capital provided by the Ministry of Finance of China, th ...
(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, Lond ...
(1,027 billion)
#
China Life (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 (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 (499 billion)
Listing requirements
According to the regulations of
Securities Law of the People’s Republic of China
The Law of the People's Republic of China, officially referred to as the Socialist legal system with Chinese characteristics, is the legal regime of China, with the separate legal traditions and systems of mainland China, Hong Kong, and Macau.
...
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
Shanghai Securities Exchange Building is a 26 floor tower in the Pudong area of Shanghai, China and home to the Shanghai Stock Exchange.
It was designed by WZMH Architects of Toronto and was completed in 1997. The tower reaches a height of 109&nb ...
since 1997.
See also
*
China Securities Regulatory Commission
The China Securities Regulatory Commission (CSRC) is a government ministry of the State Council of the People's Republic of China
The State Council, constitutionally synonymous with the Central People's Government since 1954 (particu ...
*
Economy of China
*
Hong Kong Stock Exchange
The Stock Exchange of Hong Kong (SEHK, also known as Hong Kong Stock Exchange) is a stock exchange based in Hong Kong. As of the end of 2020, it has 2,538 listed companies with a combined market capitalization of HK$47 trillion. It is rep ...
*
Shenzhen Stock Exchange
The Shenzhen Stock Exchange (SZSE; ) is a stock exchange based in the city of Shenzhen, in the People's Republic of China. It is one of three stock exchanges operating independently in Mainland China, the others being the Beijing Stock Exch ...
*
Shanghai Metal Exchange
*
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 compan ...
*
Untraded shares Untraded shares () or () refer to the shares of listed companies that are not allowed to be released by some of the investors
An investor is a person who allocates financial capital with the expectation of a future return (profit) or to gai ...
*
Leading stock
Leading stock (龍頭股 / 龙头股), which is usually applied to the stock market of Mainland China and Hong Kong, means stock of a certain company which has leading status in their business field, including scope, market share, market capi ...
*
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 t ...
*
List of stock exchanges
This is a list of major stock exchanges. Those futures exchanges that also offer trading in securities besides trading in futures contracts are listed both here and in the list of futures exchanges.
There are sixteen stock exchanges in the wo ...
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