{"id":491,"date":"2012-06-20T11:45:45","date_gmt":"2012-06-20T11:45:45","guid":{"rendered":"http:\/\/www.knowfinance.com\/?page_id=491"},"modified":"2012-06-20T11:45:45","modified_gmt":"2012-06-20T11:45:45","slug":"the-shanghai-stock-exchange","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/learn\/the-shanghai-stock-exchange\/","title":{"rendered":"Shanghai Stock Exchange"},"content":{"rendered":"

Introduction<\/p>\n

The Shanghai Stock Exchange (SSE) is based in the city of Shanghai, China. This stock exchange is one of the two exchanges that operate independently in the People\u2019s Republic of China (other stock exchange is Shenzhen Stock Exchange).<\/p>\n

In terms of the market capitalization, the Shanghai Stock Exchange is the fifth largest exchange in the world. As of December, 2011, its market capitalization was US$ 2.3 trillion.<\/p>\n

While Hong Kong Stock Exchange in Greater China is entirely open to international investors, the Shanghai Stock Exchange keeps few restrictions on foreign investors. Tight capital account controls are maintained by the Chinese authorities in Mainland China.<\/p>\n

Re-established in November, 26, 1990, the SSE is directly administered by the China Securities Regularity Commission (CSRC).\u00a0 It is a non-profit organization and became operational from 19th<\/sup> December, 1990.<\/p>\n

History<\/p>\n

The \u201cTreaty of Nanking\u201d of 1842, which brought an end to first opium war, resulted in the formation of \u201cInternational Settlements\u201d (foreign concession areas) in Shanghai.<\/p>\n

This and subsequent agreements between the Chinese and foreign governments were critical for the development of foreign trade in\u00a0China\u00a0and of the foreign community in Shanghai.<\/p>\n

Afterward, in 1860s, a market for\u00a0securities\u00a0trading commenced in Shanghai. The first shares list emerged in June 1866 and by then Shanghai’s International Settlement had developed the conditions favorable to the existence of a share market such as creation of several banks, a setting up of legal framework for\u00a0joint-stock companies, and an interest in diversification among the established trading houses (even though the trading houses themselves existed as partnerships).<\/p>\n

In 1891, while mining shares had a boom time, foreign businessmen founded the “Shanghai Share- brokers’ Association” headquartered in Shanghai as China’s first stock exchange.<\/p>\n

Then in 1904 the Association applied for registration in\u00a0Hong Kong\u00a0under the provision of the Companies regulation and was renamed as the “Shanghai Stock Exchange”.<\/p>\n

During this period, local companies mainly supplied the securities. While banks dominated private shares initially, by 1880 only the Hong Kong and Shanghai local banks remained.<\/p>\n

By 1920 and 1921, “Shanghai Securities & Commodities Exchange” and “Shanghai Chinese Merchant Exchange” began their operations respectively. In 1929, it eventually resulted in an amalgamation. The combined market operated thereafter was called as “Shanghai Stock Exchange”.<\/p>\n

While shares related to shipping, insurance, and docks sectors persisted in the market until 1940,\u00a0 industrial shares overshadowed these shares after the\u00a0Treaty of Shimonoseki of 1895, which allowed \u00a0Japan, and by extension other nations which had treaties with China, to set up factories in Shanghai and other treaty ports.<\/p>\n

Rubber plantations boomed in the second decade of the 20th<\/sup> century and consequently stock prices also rose sharply.<\/p>\n

Later in 1930s, Shanghai had developed as the financial center of the\u00a0Far East, where both Chinese and foreign investors could trade stocks,\u00a0debentures, government bonds, and futures.<\/p>\n

However, the operation of Shanghai Stock Exchange suddenly stopped after\u00a0Japanese\u00a0troops occupied the Shanghai International Settlement on December 8, 1941. Then in 1946, Shanghai Stock Exchange recommenced its operations before shutting down again 3 years later in 1949, after the\u00a0Communist revolution\u00a0intensified.<\/p>\n

Following the end of the\u00a0Cultural Revolution\u00a0and Deng Xiaoping\u2019s subsequent\u00a0rise to power, China was re-opened to the outside world in 1978.<\/p>\n

During the period of 1980s, China’s securities market developed in tandem with the country’s economic reform along with the expansion of socialist market economy. As a result, on 26 November 1990, Shanghai Stock Exchange was re-established and operations commenced a few weeks later on 19 December.<\/p>\n

Chronology<\/p>\n