China's Stock Markets: Shanghai

Filed in archive Stocks on June 26, 2007

China has three stock markets - the Hong Kong Stock Exchange, the Shanghai Stock Exchange, and the Shenzhen Stock Exchange.

The modern Shanghai Stock Exchange (SSE) was established on November 26, 1990, but it traces its roots to the Shanghai Sharebrokers' Association that was started in 1891. The name "Shanghai Stock Exchange" dates to 1904. Activity on the old exchange stopped in 1949 when the Communists took over.

Today over 800 companies are listed on the SSE. With last year's merger of the NYSE and Euronext, the SSE has become the eighth largest stock market in the world (after the NYSE-Euronext, Tokyo SE, NASDAQ, London SE, Toronto SE, the Deutsche Börse in Frankfurt, and the HKEX). It is Mainland China's biggest stock exchange.

Unlike the market in Hong Kong with its horde of foreign investors, the SSE is dominated by local investors - many of them individual investors from China's middle and working class. This is one reason (among many) that the SSE is more volatile and more speculative than the exchange in Hong Kong.

Shanghai's stock market has been compared to the American NYSE, with Shenzhen (SZSE) playing the part of the NASDAQ for China. Large companies (50 million shares or more) get listed in Shanghai; the SZSE sees smaller companies being listed there.

While most of the stocks in Shanghai are denominated in the Chinese currency, Yuan Renminbi, Chinese B-shares in Shanghai are traded in US dollars. About five percent of the companies listed on the SSE trade in B-shares.

The SSE is located in Shanghai's Pudong financial district. The market trades for four hours a day, five days a week, from 9:30 - 11:30 am and from 1:00 - 3:00 pm local time in Shanghai.