Financial services to China

The Market

The Chinese financial services market has several landmark changes and developments in recent years. Although it is still a relatively young industry in China, buy followers for twitter its development is significant and its impact is apparent.

By the end of 2013, financial services regulators had introduced more than 200 regulatory reforms. In June 2013, the State Council set into motion a nationwide pilot program, called the “National Equities Exchange & Quotations”, taking a substantive step forward in the development of a multi-layered equity market.

Doing business in China’s financial services industry remains very challenging; with strong government regulations and vastly different business cultures spanning across a unique environment. Nevertheless, the rewards and upside for companies that are successful in the market are significant and attractive.

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The Stock Market

Since China’s accession into the World Trade Organization (WTO) in 2001, the financial services industry has progressively opened up to foreign participation. The strong economic growth, rapidly expanding middle class, growing number of investors, high rates of savings and developing capital markets, have elicited interest from foreign financial firms.

The two main stock exchanges in Mainland China are the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE), 35 follow on issuances were completed in 2013, raising a total of RMB414.79 billion.

Shanghai Stock Exchange

The Shanghai Stock Exchange was established in December 1990 and is directly administered by the China Securities Regulatory Commission (CSRC). A-shares and B-shares are issued at the Shanghai Stock Exchange:

  • A-shares are quoted in Yuan and only available to foreign investment through a program known as Qualified Foreign Institutional Investors (QFII).
  • B-shares are quoted in US dollars and are open to foreign investment.

At the end of November 2014, the SSE boasted 3690 listed securities and 988 listed companies, with a combined market capitalisation of RMB14.65 trillion and a weighted average Price/Earnings (P/E) ratio of 14.23. (Source: Shanghai Stock Exchange, Market Overview, 05 Dec 2014)

The introduction of the mutual market access buy twitter account with followers program, the Shanghai-Hong Kong Stock Connect was approved and launched in 2014 by the CSRC, allowing investors in Hong Kong and Mainland China to trade and settle shares listed on either market via an exchange and clearing house.

Shenzhen Stock Exchange

The Shenzhen Stock Exchange established under direct administration of the CSRC and is based upon a multi-tiered capital markets framework, comprising a Main Board, SME Board and the ChiNext market. Its product category offerings cover equities, mutual funds and bonds.

The SZSE has 1606 listed companies, with 480 stocks on the Main Board, 726 stocks on the SME Board and 400 on ChiNext, with a combined market capitalisation of US$1.19 trillion by the end of 2013.

The number of institutional investors has grown and is starting to overtake retail investors as the major driving force behind equity markets. As investment funds, pension funds, insurance companies, corporates, sovereign wealth funds (SWFs), RMB Qualified Foreign Institutional Investor (RQFIIs) and QFIIs all look to increase their exposure to Chinese equities, the role of both domestic and foreign institutions is becoming more significant.