Q&A

What is the Shanghai Stock Exchange?

(chinadaily.com.cn)
Updated: 2010-07-29 16:34

The Shanghai Stock Exchange (SSE) was founded 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).

Based in the Chinese city of Shanghai, the stock exchange is one of the three stock exchanges operating independently in the People's Republic of China, the other two are the Shenzhen Stock Exchange and the Hong Kong Stock Exchange.

Shanghai Stock Exchange is the world's third largest stock market by market capitalization at US$3.07 trillion as of May 2010. Unlike the Hong Kong Stock Exchange, the Shanghai Stock Exchange is still not entirely open to foreign investors due to capital account controls exercised by the Chinese mainland authorities.

The securities listed at the SSE include the three main categories of stocks, bonds, and funds. Bonds traded on SSE include treasury bonds (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 US 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 79 foreign institutional investors have been approved to buy and sell A shares under the QFII program. Quotas under the QFII program are currently US$30 billion. 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. 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 15:00. The market is closed on Saturday and Sunday and other holidays announced by the SSE.

As of December 2007, 860 companies were listed on the SSE and the total market capitalization of SSE reached RMB 26.98 trillion, according to the SSE website.

Its website in English: http://www.sse.com.cn/sseportal/en/home/home.shtml