China s Financial Market
- This is a preview of the essay.
To view the full text you must login!
China's Financial Market
In the spring of 1990, China's former leader Deng Xiaoping gave his approval to the establishment of the Shanghai Stock Exchange. It was considered a big leap for China on its road to reform its state-owned economy. Soon the Shenzhen Stock Exchange was established in Shenzhen City, Guangdong province. Shenzhen was the first so-called "special economic zone" that Chinese central government established to test the ideas of capitalism. Tables 1-5 show the tremendous growth both stock exchanges have experienced in the last decade.
China's equity market is complicated by the restrictions exerted on the many types of shares by the regulation authority, China Security Regulation Commission (CSRC). Table 6 lists the share types. It is important to note the difference between A and B shares, with A shares being accessible to domestic investors only (although new regulation permits Qualified Foreign Institutional Investors, or QFIIs, to purchase), and B shares being exclusively denominated in US and Hong Kong dollars only. These restrictions are expected to evolve as China restructures its stock market. However, Vanguard should watch the evolution closely and devise its strategy accordingly...