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Shanghai Stock Exchange

The Shanghai Stock Exchange (SSE) is a Chinese stock exchange based in the city of Shanghai, with a market capitalization of nearly US$2.38 trillion making it the largest in mainland China and fifth largest in the world.

The current 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 (CSRC).


Mainland China has a second, smaller, stock exchange: the Shenzhen Stock Exchange, located in the city of Shenzhen. The distinction is made for Mainland China because the Hong Kong Stock Exchange, located in the special administrative region of Hong Kong, is the largest stock exchange in China, and has a separate history.

The formation of the International Settlement (foreign concession areas) in Shanghai as a result of the Treaty of Nanking of 1842 (which ended the First Opium War) and subsequent agreements between the Chinese and foreign governments are crucial to the development of foreign trade in China and of the foreign community in Shanghai. The market for securities trading in Shanghai begins in the late 1860s. The first share 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 1891 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 under the provision of the Companies ordinance and was renamed as "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 of 1895, which permitted Japan, and by extension other nations who 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, where both Chinese and foreign investors could trade stocks, debentures, government bonds, and futures. The operation of Shanghai Stock Exchange came to an abrupt halt after Japanese troops occupied the Shanghai International Settlement on December 8, 1941. In 1946, Shanghai Stock Exchange resumed its operations before closing again 3 years later in 1949, after the Communist revolution took place.

After the Cultural Revolution ended and Deng Xiaoping 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. On 26 November 1990, Shanghai Stock Exchange was established again and began operation a few weeks later on 19 December.


  • 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. Founding of the Republic of China.
  • 1914 - Market closed for a few months due to the Great War (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 takeover. Founding of the People's Republic of China in 1949.
  • 1978 - Deng Xiaoping re-opened China to the rest of the world.
  • 1981 - Trading in treasury bonds were resumed.
  • 1984 - Company stocks and corporate bonds emerged in Shanghai and a few other cities.
  • 1990 - The present Shanghai Stock Exchange re-opened in November 26 and began operation on December 19.
  • 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 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 largest ever (US$21.9 billion) IPO by the Industrial and Commercial Bank of China (ICBC) was launched in both Shanghai and Hong Kong stock markets.[1]
  • 2007 - 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.[2] Fears of a market bubble and intervention by authorities caused large fluctuation not seen since the past decade.[3] [4]


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 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) system. There is a plan to eventually merge the two types of shares.

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.

Market Data

As of February 2008, 861 companies were listed on the SSE and the total market capitalization of SSE reached RMB 23,340.9 billion (US$3,241.8 billion; US$1 = RMB 7.20).

SSE's top ten largest stocks

Source: Shanghai Stock Exchange (market values in RMB/Chinese Yuan). Data arranged by market value. Updated on 15 January 2007

  1. Industrial and Commercial Bank of China (1,397.86 billion)
  2. China Life Insurance (904.78 billion)
  3. Bank of China (887.31 billion)
  4. Sinopec (692.22 billion)
  5. China Merchants Bank (201.09 billion)
  6. Shanghai International Port (Group) (164.56 billion)
  7. Baosteel (161.81 billion)
  8. Daqin Railway (114.71 billion)
  9. CITIC Securities (107.99 billion)
  10. Shanghai Pudong Development Bank (104.30 billion)


The SSE 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.

Listing Requirements

According to the regulations of Securities Law of the People™s Republic of China 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 50 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. 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.

See also



  1. BusinessWeek - China's ICBC: The World's Largest IPO Ever - retrieved on March 2, 2007.
  2. Thisismoney - China share turnover exceeds UK - retrieved on June 5, 2007.
  3. BBC News - Share sale knocks Chinese market - retrieved on March 2, 2007.
  4. MSNBC - China shares tumble as panic spreads - retrieved on June 4, 2007.

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