China Financial Market
Private enterprise has brought about tremendous vibrancy in the Chinese economy but this whole process has been conspicuous by the absence of a regulated financial market. Apparently the process of establishing a capital market structure requires a longer gestation than it does to set up an industrial base.
The financial market is evolving in China quite rapidly but perhaps not as fast as one would like, given the size of Chinese industry. For an economy the size of China, growth hasn’t been even with certain parts of the economy reaching first world levels of growth while other parts are still way behind.
A case in point is the territory of Hong Kong and its financial market. The Hong Kong Stock Exchange is one of the world’s premier securities exchange and its index the Hang Seng, is also one of the most famous indexes of the world. Unlike most other prime financial markets of the world the Hong Kong financial market do not reflect the health of the Chinese economy.
Partly due to history and also because the Hong Kong financial market has a distinct global dimension, it is not integrated to the Chinese economy as the other major financial markets are, to theirs. Therefore, despite the market capitalization of the Hong Kong financial market adding up to China’s GDP, it does not reflect the health of the country’s capital markets.
Financial markets in China
Centered on the Hong Kong securities exchange it was established at the end of the 19th century and is the sixth largest securities exchange in the world with a market capitalization of over USD 1.8 trillion. A total of 4,338 stocks are listed on the Hong Kong securities exchange.
The Shanghai securities exchange was established in November 1990 and is mainland China’s premier securities exchange with 837 listed companies and an investor base of 37.87 million in FY 2004. During the same time the total market capitalization of Shanghai securities exchange was RMB 2.6 trillion and the amount of capital raised amounted to RMB 45.7 billion.
The Shenzhen securities exchange was established in 1990 and is the second most important securities exchange in mainland China after the Shanghai securities exchange. The Shenzhen securities exchange has 540 listed companies and 35 million registered investors with a market capitalization of RMB 1 trillion.
Additionally China has set up commodities markets with the potential to integrate in a single Chinese financial marketplace in the future. These markets are in Dalian and Zhengzhou.