History
Shanghai was the first city in China where securities business was developed. Stock trading in Shanghai traces its roots back to the 1860s. The Shanghai Security Goods Exchange and the Shanghai Chinese Security Exchange commenced operations respectively in 1920 and 1921. By the 1930s Shanghai had emerged as the financial center of the Far East, where both Chinese and foreign investors could trade stocks, debentures, government bonds and futures. In 1946, Shanghai Securities Exchange was created on the basis of Chinese Security Exchange, but it ceased operations in 1949 when the communists took over China.
With the development of socialist market economy under Chairman Deng Xiaoping’s opening up policy in the 1980s, treasury bonds and stocks gradually resumed trading. On November 26, 1990, Shanghai Stock Exchange (SSE) was established and it started operation on December 19, 1990. After several years’ operation, SSE had become the most prominent stock market in China. At the end of 2007, there were 860 listed companies and 904 listed stocks with a total market capitalization of RMB 26,984 billion (US$3,670 billion), a leap of 276% from 2006. The market capitalization of tradable shares jumped 293% to RMB 6,453 billion (US$878 billion). The year-end total share capital of all the listed companies amounted to 1,417 billion shares, of which 340 billion shares or 23.98% were tradable. In 2007, the total amount of equity funds raised was RMB 670 billion (US$91 billion), which lifted SSE to the 4th spot globally and 1st place in Asia in terms of total amount of funds raised.
Future Developments
SSE is going to launch International Trade Board in 2010, which will allow foreign companies to sell shares denominated in the Chinese currency RMB. It will help SSE to raise up to RMB300 billion ($43.95 billion) through initial public offerings in 2010, while Hong Kong is forecast to raise HK$300 billion ($38.96 billion).
Functions
SSE is a membership institution directly governed by the China Securities Regulatory Commission (CSRC). It bases its development on the principle of “legislation, supervision, self-regulation and standardization”. Its functions are providing marketplace and facilities for the securities trading; formulating business rules; accepting and arranging listings; organizing and monitoring securities trading; regulating members and listed companies; managing and disseminating market information.
Categories of Securities Listed
Securities listed on SSE fall into four categories: Stocks, bonds, funds and warrants. Stocks are further divided into Class A Shares and Class B Shares, with A Shares limited to domestic investors and QFII only, while B Shares available to both domestic and foreign investors. In 1990 the first batch of 8 A Shares were listed. In 1992, the first B Share made debut on the stock market. By the end of 2007, there were 850 A Shares and 54 B Shares.
Trading Hours
SSE is open for trading from Monday to Friday. In the morning session, the market opens with a call auction between 9.15 am and 9.25 am, which is followed by a continuous auction between 9.30 am and 11.30 am. The afternoon session begins with a continuous auction between 1.00 pm to 3.00 pm and then block trading takes place between 3.00 pm – 3.30 pm. The market is closed on weekends and public holidays.
Price Up / Down Limit
Trading in Both A and B Shares and investment funds is subject to a 10% daily price up and down limit, except for the first trading day. Special treatment shares (ST) are subject to a 5% daily price up and down limit. The price limits on warrants are based on that of their corresponding underlying securities and are determined by multiplying the conversion ratio by a certain coefficient. The price of a block trade of securities with a price limit is determined by the buyer and seller within the price limit applicable to such securities on the day of trading. The price of a block trade of securities without any price limit is negotiated by the buyer and seller within 30% of the previous closing price or between the highest and lowest traded prices on the day of trading. In the absence of any transaction for a particular stock, the closing price of the previous trading day will be the execution price.
Stock Index Futures, Short Selling and Margin Trading
In January, 2010, China Securities Regulatory Commission approved stock index futures and a trial run on short selling and margin trading.
Indices
SSE Composite Index
SSE Composite Index is an index of all stocks (A and B shares) that are traded at SSE. The base day 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.
SSE A-Share Index
SSE A-Share Index includes all the A Shares listed on SSE and is designed to reflect the overall performance of Shanghai A-share market.
SSE B-Share Index
SSE B-Share Index covers all the B Shares listed on SSE and is designed to reflect the overall performance of Shanghai B-share market.
SSE 180 Index
SSE 180 Index selects 180 of the most representative stocks in SSE – listed A Shares to reflect the overall performance of Shanghai stock market.
SSE 50 Index
SSE 50 Index contains 50 of the largest and most liquid stocks in SSE 180 Index and is designed to reflect the overall performance of a group of leading and most influential enterprises in Shanghai stock market.
Investors
In 2006,SSE recorded a total of 41.0147 million trading accounts. Of them, 37.9994 million were A share accounts, 1.0160 million were B share accounts and 1.9993 million were institutional fund accounts.
Members
At the end of 2006,SSE had 152 registered members in total, of which 139 were securities firms and 13 were non-securites firms. The 152 members had 3044 business branches and 4988 trading seats, of which 4739 were A-share trading seats while the remaining 249 were B-share trading seats. Among securities firm members, 57 had a registered capital of no less than RMB 1 billion each, 19 had a registered capital of no less than RMB 2 billion each, and the top 5 had a registered capital of no less than RMB 3 billion each.
Listed companies
By the end of 2006, the Shanghai Stock Exchange had a total of 842 listed companies. There were 13 new listings in that year with 211.562 billion RMB raised, 6959.12% up from the previous year.
By the end of December 2007, there were over 71.30 million investors and 860 listed companies. The total market capitalization of SSE hit RMB 26.98 trillion. In 2007, Capital raised from SSE market surpassed RMB 661.6 billion.
For more information, please refer to the 2008 Fact Book published by SSE, which is available from their website.
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Shanghai Stock Exchange Composite Index (SSECI) Constituents
China Stocks B-Share in Details
List of China B Shares on Shanghai Stock Exchange
China Shanghai B Share Trading System
Trading of China Stocks – Lot Size
China Stock Trading Knowledge – Ticks and Tolerance
Listing Requirements on Shanghai and Shenzhen Stock Exchanges
China Stock Trading Hours Converted To Your Time Zone
What is QFII
