The Stock Exchange in Shanghai a Brief History

By the 1930’s the stock exchange in Shanghai in China was the financial centre of the Far East. However trading abruptly ended when the Japanese army invaded in December 1941 an although it briefly open again after the end of the Second World War the Communist revolution of 1949 closed the stock exchange again.


The rise of the Shanghai stock market to its position of power in the 1930’s began in the 1840’s. The end of the First Opium War in 1842 resulted in the Treaty of Nanking and this was the first opening for foreign investors in China. The change in relationships between China and the rest of the World led to the first trading in securities in Shanghai in the late 1860s. The first list of shares appeared in 1866 and this is tandem with developments in banking helped to gain Shanghai a growing reputation as a solid investment market.


The first stock exchange in China was opened in Shanghai during the boom in mining shares in 1891 and it grew in size during the final decade of the 19th century. By 1921 the success of the Chinese investment market had resulted in Shanghai operating two separate stock exchanges. The "Shanghai Securities and Commodities Exchange" and "Shanghai Chinese Merchant Exchange" ran alongside each other until they merged in 1929 and was renamed the "Shanghai Stock Exchange".


By the 1920’s shares in rubber plantations had replaced mining stocks as the primary stock of the Shanghai stock exchange. By the 1930’s Chinese and foreign investors were trading stocks, shares, government bonds and futures. The Japanese invasion in 1941 called time on the first period of the Chinese Stock Exchange.


During the first decades of Communist rule there was no stock exchange in China but after Deng Xiaoping came to power in China the country was slowly re-opened to the outside world. The changes in the economy in China were mirrored by developments in the securities market. The socialist market economy in China slowly replaced the old communist controlled economy. The opening of the new Shanghai stock market on the 26 November 1990 was a signal that the Chinese economy was moving closer to free market approach.


The Shanghai stock exchange is now the biggest in China and the 5th biggest in the world. It is run as a non-profit organisation by the China Securities Regulatory Commission (CSRC). You can trade stocks, funds and bonds on the exchange. In order to get listed you are required to have recorded a profit in the previous three years.


There are two main exchanges or classes currently traded. The A-Shares and B-Shares. The A-Shares are quoted in Yuan and are mainly for investment by other Chinese citizens and companies although limited foreign investment is allowed. If you are a foreign company and you want to invest in A-Shares you can apply via the qualified program named QFII.The B-Shares are quoted in US Dollars and are open to foreign investment .


The SSE is open Monday to Friday from 9.15 to 15.00. In February 2008 over 800 companies were listed in the exchange.





Tony Heywood ©





Asian Investment Funds and Stocks and Shares ISA