Shenzhen Stock Exchange

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Shenzhen Stock Exchange (Simplified Chinese: 深圳证券交易所) is one of the two stock exchanges in the mainland of the People's Republic of China. It is based in Shenzhen, Guangdong Province.

Exchanges

The Shanghai and Shenzhen stock exchanges list more than 1,200 companies with a combined market capitalization of US$500 billion (2005) (30% of GDP, see list of countries by GDP (nominal)), rivalling the Hong Kong Stock Exchange as Asia's second-largest stock market behind the Tokyo Stock Exchange.

The central government shut down trade on the Shenzhen and Shanghai Stock Exchanges for over a week from May 1, 2003 to fight against Severe Acute Respiratory Syndrome (SARS).

Listed companies

Most of the companies within this market belong to listed company in which the Chinese government maintains controlling interest. With regards to the listed companies, the government has viewed the stock markets has means of raising capital, but there is no current interest to privatization or selling off the state controlling interest in the SOE's. Until 2005, two-thirds of the shares in listed companies were non-tradable on the exchange, creating a problem in which the tradable shares were valued higher than their proportion in the company. In 2005, as part of the Chinese stock issue reform, the non-tradable shares were made tradable and the holders of tradable shares were compensated by having extra equity in the company.

Indices

The Shenzhen Exchange launched the blue-chip composite index in January 1995. It also directed a subsidiary, the Shenzhen Securities Information Co., to launch the Shenzhen Stock Exchange 100 Index on the first trading session of 2003, using 2002's final day of business as a benchmark.

The new index is composed of major firms such as Shenzhen Development Bank, property developer China Vanke Co Ltd and Guangdong Electric Power Co. Index components account for about 40 percent of the Shenzhen bourse's capitalization, 61 percent of the combined after-tax profits of Shenzhen-listed companies, and 43 percent of turnover.

The Shenzhen exchange will adjust the index's components every six months.

IPO

The initial public offering (IPO) activity in Shenzhen stock exchange was suspended from September 2000 as the Chinese government pondered merging its bourses into a single exchange in Shanghai and launch a Nasdaq-style second board in Shenzhen aimed at private and technology companies.