China stock index is controlled and regulated by three stock exchanges in China. The three China stock exchanges are - Shanghai Stock Exchange, Shanghai Metal Exchange and Shenzhen Stock Exchange.
All the China stock exchanges are largely under the surveillance of the China government. Apart from taking the controlling interest in the stock index swings, the China government also regulates and implements amendments related to China stock index. The general people in China are now coming forward to invest in stocks following the rapid development in the information technology.
Shanghai Stock Exchange (SSE) is the largest stock exchange in the mainland China. The Shanghai Stock Exchange is also the eighth largest stock exchange in the world with market capitalization amounting to US$1.7 trillion. It is a non-profit organization and it controls the stock indices of China.
The China Securities Regulatory Commission directly regulates the working of Shanghai stock exchange. The Shanghai stock exchange has 842 companies listed with it. The stocks, bonds and funds of these companies are traded in Shanghai stock exchange on an every day basis thereby regulating the China stock index. The trading of foreign companies was prohibited in the Shanghai stock exchange prior to the amendments adopted in December 2002. The Qualified Foreign Institutional Investor system gave a green signal to the foreign companies to trade their stocks and bonds in the Shanghai stock exchange.
The trading of futures is handled by the Shanghai Metal Exchange (SHME) in China. Shanghai Metal Exchange was established in 1992 to trade the non-ferrous metals. Copper, aluminum, lead, nickel, zinc and tin are the major non-ferrous metals that are traded in Shanghai Metal Exchange.
Located in Shenzhen in China, Shenzhen Stock exchange is another stock exchange that controls the stock indices of China. The Shanghai stock exchange and Shenzhen Stock Exchange jointly list more than 1200 companies resulting in a market capitalization of US$500 billion, as calculated in 2005.
In order to fight against the Severe Acute Respiratory Syndrome or more commonly known as SARS, the China government stopped the operations of Shanghai Stock Exchange and Shenzhen Stock Exchange for one week in the year 2003.