Here’s What We Know About the New Beijing Stock Exchange By Gary Bailer
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eijing last month announced plans to establish a third major stock exchange on the Chinese mainland to serve ‘innovation-oriented’ small and medium-sized enterprises (SMEs). President Xi Jinping said the new market will be in the capital city during a speech given to the International Fair for Trade in Services, as cited by BBC. The announcement comes at a time when US-listed Chinese companies have come under scrutiny by investors. According to China Daily , the goal of the new stock exchange is “to link multi-level capital markets and form the path of direct financing for SMEs,” among other aims. In an opinion piece on China.org. cn, Tom Fowdy noted that the Beijing Stock Exchange can be viewed as a plan to “to further deepen the reform and upgrading of China’s National
Equities Exchange and Quotations (NEEQ).” The equity trading system for SMEs was launched in 2013. It’s still unclear when the exchange will begin trading. Barron reported that it is likely that individuals will be allowed to invest in the new exchange, citing quotes from Chinese media. China had 167 million investors as of June 2020. The other two major players in the Chinese mainland are the Shanghai and Shenzhen Stock Exchanges. The Shanghai Stock Exchange (SSE) is the Chinese mainland’s largest exchange. It’s run by the China Securities Regulatory Commission (CSRC) and focuses on trading stocks, funds and bonds. The SSE currently ranks 5th, in market capitalization, behind the NYSE, Nasdaq, Tokyo Stock Exchange and London Stock Exchange. Most of its market cap consists of formerly
state-run companies, such as major banks and insurance companies. The exchange consists of the Main Board and the STAR Market – viewed as China’s version of Nasdaq. As for the Shenzhen Stock Exchange, individual investors make up the majority of investors, and the exchange is home to mostly smaller and emerging-sector companies, many being subsidiaries of firms in which the Chinese government maintains a high level of control. A-Shares, B-Shares, mutual funds, indices, fixed income products and derivatives are all traded on the exchange. It consists of the three boards, including the Main Board, SME Board and ChiNext Market.
OCTOBER 2021 | 07
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