Shanghai Stock Exchange

The Shanghai Stock Exchange (SSE) was established on 26th November, 1990 and formally opened on 19th December of the same year. It is directly supervised and managed by the China Securities Regulatory Commission (CSRC). SSE has four major categories of securities trading varieties: stocks, bonds, funds and derivatives, which make its market structure relatively completed. The trading of the Shanghai Stock Exchange adopts the mode of electronic bidding, based on the principle of price priority and time priority.

By the end of June 2019, the number of listed companies in Shanghai Stock Exchange had reached 1521, with a total market capitalization of CNY 32 trillion. The cumulative turnover of stocks in 2018 was CNY 40.3 trillion, with an average daily turnover of CNY 165.9 billion and the total amount of fund-raising in the stock market was CNY 611.4 billion. 12089 bonds were listed on the bond market, with the depository balance totaled CNY 8.4 trillion and the cumulative turnover of bonds was CNY 216.9 trillion. The funds listed on SSE had reached 233, the cumulative turnover was CNY 7.2 trillion and the derivatives market with a total cumulative turnover of CNY 179.8 billion in the whole year. The number of accounts opened by investors in Shanghai has reached 296.1 million.

Shenzhen Stock Exchange

Shenzhen Stock Exchange (SZSE) was established on 1st December, 1990, it is a self-regulated legal entity under the supervision of China Securities Regulatory Commission (CSRC). Shenzhen Stock Exchange has basically put in place a framework of multi-tiered capital market comprising the Main Board, SME Board, and the ChiNext market. SZSE’s products cover equities, mutual funds and bonds. The product lines include A-shares, B-shares, indices, mutual funds (including ETFs and LOFs), fixed income products (including SME collective bonds and asset-backed securities), and diversified derivative financial products (including warrants and repurchases). Shenzhen Stock Exchange adopts a similar trading mode as the Shanghai Stock Exchange.

By the end of June 2019, the number of listed companies in Shenzhen stock exchange had reached 2170, including 472 listed on Main Board, 934 on SME Board and 764 on ChiNext, with a total market capitalization of CNY 20.83 trillion. 5539 bonds (including asset-backed securities) are listed on SZSE, with a face value of CNY 2.04 trillion and 520 listed funds with a net asset value of CNY 183.7 billion.

Main Board Market

Main board market is an important part of the Chinese capital market, which is designed for the listing of large-scale companies and operated in both Shanghai Stock Exchange (the stock code begins with 60) and Shenzhen Stock Exchange (the stock code begins with 000). Main board market has the high requirements for the issuer in terms of the operating period, the profitability, the market capitalization, the sufficiency of working capital etc., therefore, most of the listed companies are large mature enterprises, with a large capital scale and stable profitability. By the end of June 2019, 1993 companies were listed on the main board, with a total market capitalization of CNY 39 trillion.

Foreign institutional investors can now allocate to Main Board Market through QFII, RQFII and Stock Connect.

STAR Market

STAR Market, which is the shorthand of Sci-Tech Innovation Board, is a new trading platform in China capital market with the registration-based system for listed companies. The concept was announced by Xi Jinping, Chairman of China during the 1^st China International Import Expo in Shanghai in November 2018. After that, the China Securities Regulatory Commission (CSRC) officially launched the new STAR market on 13^th June 2019 and began trading on 22^nd July 2019 with 25 listed companies.

STAR Market is regarded as the Chinese version of Nasdaq, it was founded to meet the needs of the listing of scientific and technological innovation enterprises in China, and to provide an important gateway for capital and technology innovation. The companies listed on STAR Market will mainly focus on internet, big data, cloud computing, artificial intelligence, software and integrated circuits, high-end equipment manufacturing, biomedicine, new materials, new energy and other high-tech companies.

Foreign institutional investors can now allocate to STAR Market through QFII and RQFII.

SME Board Market

Small and Medium Enterprises Board (SME Board, the stock code begins with 002) was formally launched by the Shenzhen Stock Exchange in May 2004, it is founded to list and trade shares of small and medium size firms, which typically have high growth and high profitability but still not meeting the listing requirements of the Main Board. Most of the SME Board-listed companies are in the leading position in their respective sub-industries, with nearly 90% of them have the core patented technology. By the end of June 2019, 934 companies were listed on the SME board, with a total market capitalization of CNY 8.6 trillion, approximately 16.42% of the total market capitalization of the Shenzhen and Shanghai stock markets.

Foreign institutional investors can now allocate to SME Board Market through QFII, RQFII and Stock Connect.

ChiNext Market

ChiNext Market (the stock code begins with 300), which is the Chinese characteristics Growth Enterprises Market Board, was launched by the Shenzhen Stock Exchange in May 2012. ChiNext Market is mainly focus on the Sci-Tech Innovation SMEs which cannot be listed on the main board yet, providing them with financing channels and growing space. The enterprises listed on the ChiNext Market are mainly “two high” and “six new” enterprises, that is, high-tech, high growth, new economy, new services, new agriculture, new energy, new materials, new business model enterprises. As of 28^th June 2019, there are 764 companies listed on the ChiNext Market, with a total market capitalization of CNY 5.1 trillion.

Foreign institutional investors can now allocate to SME Board Market through QFII, RQFII and Stock Connect.

NEEQ Market (New Third Board)

NEEQ Market, which is also known as the New Third Board Market, is the OTC market approved by the State Council of China. The National Equities Exchange and Quotation (NEEQ) was established in January 2013, the establishment of the New Third Board is mainly for high-tech, high-growth, high-innovation enterprises in the early days of the establishment of an efficient financing platform. A large number of SMEs cannot obtain financing in the Main Board Market because of their small scale, high investment, high risk etc. The aim of the new third board market is to provide early financing for high-tech enterprises, promote the development of venture capital, and optimize the exit channel of venture capital.

As of the end of June 2019, there were 9921 listed companies in the NEEQ Market, with a total market capitalization of CNY 3.79 trillion. A total of 1402 stock offerings were completed in 2018, raising CNY 60.44 billion.

At present, foreign institutional investors cannot allocate to NEEQ Market, but according to the draft rule of the merging schemes of QFII and RQFII, a qualified investor may invest in NEEQ Market soon