CHINA / Backgrounder
Shenzhen Stock Exchange
(Wikipedia)
Updated: 2006-10-17 14:58
Shenzhen Stock Exchange is one of China's three stock exchanges. It is
based in Shenzhen, China.
Exchanges
The Shanghai and Shenzhen stock exchanges list more than 1,200 companies
with a combined market capitalization of US$500 billion (2005) (30% of
GDP), rivalling the Hong Kong Stock Exchange as Asia's second-largest
stock market behind the Tokyo Stock Exchange.
Privatization
Market capitalization is a problematic concept in the market. Most of the
companies within this market belong to state owned enterprises (SOEs) in
which the Chinese government maintains controlling interest. With regards
to the SOE's, the government has viewed the stock markets has means of
raising capital, but there is no current interest to privatization or
selling off the state controlling interest in the SOE's. One difficulty
is that were the Chinese government willing to privatize the SOE's, the
flood of shares on the markets would likely lead to a sharp drop in
prices.
Indices
The Shenzhen Exchange launched the blue-chip composite index in January
1995. It also directed a subsidiary, the Shenzhen Securities Information
Co., to launch the Shenzhen Stock Exchange 100 Index on the first trading
session of 2003, using 2002's final day of business as a benchmark.
The new index is composed of major firms such as Shenzhen Development
Bank, property developer China Vanke Co Ltd and Guangdong Electric Power
Co. Index components account for about 40 percent of the Shenzhen
bourse's capitalization, 61 percent of the combined after-tax profits of
Shenzhen-listed companies, and 43 percent of turnover.
The Shenzhen exchange will adjust the index's components every six months.
IPO
The initial public offering (IPO) activity in Shenzhen stock exchange was
suspended from September 2000 as the Chinese government pondered merging
its bourses into a single exchange in Shanghai and launch a Nasdaq-style
second board in Shenzhen aimed at private and technology companies.
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