Chinese Stock Market
By: Anne Durrell
After many disruptions due to wars such as World War I, the communist take over that created the People's Republic of China in 1949, and assorted revolutions, Shanghai finally became the financial hub of the Far East. Today both foreign investors as well as the Chinese can trade stocks, debentures, futures and government bonds.
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The Chinese Stock Market handles three types of securities, funds, and bonds and of course stocks. The bond market is interesting as the SSE treasure bonds are the most active in China. As for stocks, there are two very different categories issued by the Shanghai Stock Exchange. "A" shares and also "B" shares. "A" shares will be valued using the home Renminbi Yuan (RMB) currency, whereas "B" shares are quoted and priced in U.S. dollars.
Many reforms by the Qualified Foreign Institutional Investor (QFII) program have grown, and there is a plan to ultimately merge "A" and "B" shares sometime in the future. The SSE's top stocks involve petroleum, energy, banks and insurance companies, as do the majority of other countries.
Interestingly enough the companies that are offered in the Chinese Stock Market are all state-run companies, thus the companies often form a state monopoly, and in accordance to this, their stocks grow. In order to fully understand the Chinese Stock Market, one must realize how unique and different their management style is.
Industrial materials have created some interesting ventures. For instance, there is a Shanghai-based steel mill by the name of Baosteel that is now in a joint venture in Brazil. What has happened is that even though China's steel market is already much larger than the U.S. and Japan combined, China is still importing steel.
By reaching out to Latin America, Africa, Canada and such places to be closer to those resource-rich supplies, they can manufacture more to answer a growing need and the Baosteel steel mill's presence on the Chinese Stock Market will therefore appreciatively grow.
It is in no way a surprise that China has now become a new untapped area for global business, and as such multinationals are now playing their unique roles in the Chinese Stock Market.
Check out my other guide on forex capital market and stock market futures
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