Shenzhen stock market
Shenzhen stock market has two
types of markets.They are primary
market and secondary market.
Primary market: In 1987, six credit cooperatives merged to
form the Shenzhen Development Bank and issued irrevocable stocks to the
public.This was the beginning of the
primary stock market in Shenzhen By the end of 1990, over 200 enterprises had
engaged in the experiment, among which five companies publicly issued stocks with
a total value of 270 million Yuan.In 1992
alone an additional seven companies offered stock valued at one billion
Yuan.As they did with the Shanghai exchange, the
authorities have introduced a bidding system to improve the workings of the
Shenzhen exchange.
Secondary market: As an Shanghai,
the evolution of the secondary market in Shenzhen also went through three
distinct stages (1) an early stage, (2) a regulated stage, and (3) the
establishment of the stock exchange.
Early stage: Initially there was only lukewarm
interest in Shenzhen Development Bank shares.Although the city government urged its
employees Âto take the lead in buying stocks and authorized several
securities companies to open over-the-counters, Shenzhen Development Bank
in selling only 79 percent of its stock.Similar problems were experienced by other companies in subsequent
years.The trend changed, however,
as a few companies distributed bonuses to their shareholders in 1989,
allowing some shareholders to reap unanticipated gains
Regulated stage: Early in 1990, the Shenzhen stock
market was characterized by bullish expectations.This induced large numbers of people,
including government employees and securities firms staff, to engage
upward rapidly and black-market prices rose even higher.The resulting increase in volatility
owing to large scale speculation generated concern among both central and
local authorities.In 1990 the city government curbed stock
speculation by banning trades outside of the over-the-counters, levying capital
gains taxes,instituting limits on price changes resulted in a slump in
stock prices beginning in 1990.
Establishment of the exchange: The Shenzhen securities exchange, which
was set up in 1989, started provisional operations on 1990 and officially
opened on 1991.The exchange lifted
price limits once trading began.In
1991 stock prices rebounded as the public regained interest in
equities.For example, in 1991,
around four hundred thousand people queued up for several nights issued
shares.In 1992, there were 24
companies listed on the exchange, including five non-local companies, and
the market value of shares was 49 billion Yuan.In 1993, 77 companies were listed on the
exchange, of which 47 were non-Shenzhen firms from 17 other provinces, and
the market value of shares was 143 .36 billion Yuan.At the end of 1994, 118 companies having
a combined market value of 109 billion Yuan were listed on the exchange.
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