Challenges from WTO Membership
Edited by Kam C. Chan, Hung-Gay Fung and Qingfeng ‘Wilson’ Liu
Chapter 1: Chinese Stock Market: Perspectives in Institutional Structure, Regulations and Performance
Kam C. Chan, Hung-gay Fung and Julia S. Kwok INTRODUCTION To facilitate economic reforms and to help state-owned enterprise raising capital, China began its capital market reform in the late 1980s. A big step taken was to launch its two stock exchanges (Shanghai Stock Exchange and Shenzhen Stock Exchange) and allowed state-owned enterprises to have their shares listed on two stock exchanges. Shanghai Stock Exchange was founded on 26 November 1990 and Shenzhen Stock Exchange was oﬃcially established later on 1 December 1990. Over 15 years, the Chinese stock markets came a long way. By 2001, the total market capitalization of Chinese stock markets was ranked second in Asia (Jingu 2002, p. 3). There are many events and policy changes throughout the economic reforms. We present some of these major events and changes in Appendix 1.1. These events and policy changes reﬂect the development of an equity market in China and they oﬀer valuable lessons and policies for China and other emerging markets. While there have been a number of studies on Chinese stock markets in recent years, the discussion of institutional structure and regulations in the Chinese stock market is rather limited. This chapter will shed some lights on China’s institutional structure and regulations. Moreover, the Chinese stock market experienced a downturn beginning in the early 2000s. We also oﬀer some discussions and examine how the Chinese government reacts to the recent poor performance of its stock market. 25 26 Financial markets INSTITUTIONAL STRUCTURE Types...
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